- A proposal for the launch of Aave’s V3 iteration on Base has been approved by community members.
- AAVE sees increased distribution, putting downward pressure on its price.
Aave’s [AAVE] governance forum has approved a proposal to deploy the lending protocol’s V3 iteration on the new Layer 2 (L2) scaling network Base.
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The proposal was passed unanimously, with 100% of votes in favor. As hinted by Aave’s founder Stani Kulechov, the deployment is expected to go live on Base this week.
Next week will continue being based pic.twitter.com/hAbSjk7Fnl
— Stani.lens (@StaniKulechov) August 20, 2023
According to the proposal, through this deployment, Aave’s users will be able to deposit and borrow Wrapped Ethereum [WETH], USD Base Coin [USDbC], and Coinbase ETH (cbETH) on the Base platform.
“The Base and Coinbase ecosystem is a good opportunity of expansion for Aave, touching into the new user base and exploring fresh use cases,” the protocol noted, as the motivation behind the expansion.
The right timing for a new deployment?
While other leading decentralized finance (DeFi) protocols dawdle, Aave’s decision to launch on Base is well-timed, as the protocol seeks to distance itself from the aftermath of the Curve Finance reentrancy attack of 30 July.
Due to its exposure to the exploit, the TVL on the protocol has plummeted in the last month. According to DefiLlama, Aave’s TVL has fallen by 21.18% in the last 30 days, relinquishing its position as the second largest in terms of TVL to competitor MakerDAO [MKR].
The decision to launch its V3 iteration on Base, a newer network that has been well-received by community members, could be an attempt to restore the confidence of liquidity providers who withdrew their funds after the Curve Finance hack, which depleted some of Aave’s assets.
Source: DefiLlama
This deployment also comes eight months after the same iteration was launched on and three months after it went live on L2 network Metis.
Moreover, since it launched on the Ethereum Mainnet, Aave V3 has attracted $2.33 billion in deposits and $811.85 million in loans.
With the increased activity on Base at the moment, the iteration might reach the 10,000 unique addresses milestone on the chain faster than it did on Ethereum.
The Aave V3 Ethereum Market recently reached a notable milestone, as it welcomed 10,000 unique addresses in just under six months. pic.twitter.com/RHs4qyk2nK
— Aave (@AaveAave) July 20, 2023
AAVE troubles yet to abate
At press time, the protocol’s governance token AAVE exchanged hands at $57.29. According to CoinMarketCap, the alt’s value has declined by 22% in the last month.
At press time, the token’s Relative Strength Index (RSI) and Money Flow Index (MFI) rested beneath their respective neutral regions. This showed that sell-offs exceeded accumulation amongst daily traders.
Realistic or not, here’s Aave’s market cap in BTC terms
Likewise, its Chaikin Money Flow (CMF) returned a negative value of -0.14 as of this writing. This signaled increased capital flight as many token holders rallied to sell their assets.
With a 91.4% decline from its all-time high, which it clinched two years ago, 89% of AAVE holders held at a loss, data from IntoTheBlock showed.
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