Aave, the leading decentralized finance (DeFi) lending protocol, has seen its token price surge by 40% in just two weeks and by 142% over the past 12 months, fueled by a combination of strategic technological advancements and promising updates to its tokenomics.
The recent integration of Aave V3 on Ethereum’s layer 2 network, ZKsync Era, and a proposed “Aavenomics” upgrade have both significantly contributed to this bullish momentum, positioning Aave for further growth.
ZKsync Era integration unlocks institutional opportunities
The launch of Aave V3 on the Ethereum layer 2 scaling solution, ZKsync Era, marks a significant milestone in the protocol’s evolution.
This integration is set to unlock new opportunities, particularly for institutional investors, by leveraging advanced ZK-proof technology that enhances scalability, privacy, and security.
Aave’s collaboration with ZKsync aims to expand yield-generating opportunities on the Era mainnet, offering users access to faster and cheaper transactions.
The Aave DAO has already approved USDT, USDC, WETH, and wstETH as the first supported assets on ZKsync Era. The integration was deployed by BGD Labs, with risk analysis conducted by Chaos Labs and price feeds provided by Chainlink.
Further, Aave aims to utilize the Elastic Chain network to create custom platforms and private networks tailored to specific institutional needs.
AAVE tokenomics upgrade fuels investor optimism
Alongside the ZKsync integration, Aave has proposed a major tokenomics upgrade, referred to as “Aavenomics update.”
This proposal includes eliminating the safety module, which currently offers AAVE stakers inflationary yields in exchange for risking their tokens. Instead, the protocol plans to redirect a portion of its revenue to users staking stablecoins and select assets, effectively reducing inflation and enhancing the token’s value proposition.
The proposed changes have sparked renewed optimism among investors, leading to a 50% surge in AAVE’s price since the time the update was proposed.
Aave’s dominance in the DeFi lending market is evident, with the protocol holding a 70% market share and $7.52 billion in active loans. Moreover, the total value locked (TVL) in Aave has soared by 80% year-to-date according to DeFiLlama data, reflecting growing confidence in the platform’s future prospects.
The combination of technological innovation and strategic financial adjustments has positioned Aave as a key player in the DeFi ecosystem, with its recent price rally likely being just the beginning of further gains.
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