In brief

  • Aave has received $25 million in new funding.
  • The investment comes from Blockchain Capital, Standard Crypto, and Blockchain.com ventures, among others.
  • Aave is migrating to a new governance token AAVE in a bid to further decentralize the platform.

Decentralized lending and borrowing protocol Aave today announced a $25 million investment from Blockchain Capital, Standard Crypto, and Blockchain.com ventures, among others.

“Aave raised funds from strategic investors to bring DeFi closer to institutional use and to expand the team size to serve the growth in Asian markets,” CEO Stani Kulechov said, adding that the new stakeholders will participate in the protocol’s governance and staking.

Aave allows depositors to earn interest by providing liquidity to lending pools, and users can borrow cryptocurrencies with little collateral. It’s currently the third-largest protocol in the booming Decentralized Finance (DeFi) sector, in terms of locked value, with $1.3 billion of assets staked on the protocol.

The funding supplements $24 million that has been raised through three token sales since the project was announced in 2017.

From LEND to AAVE

Earlier this month Aave began gradually upgrading its LEND token to a new, more powerful, AAVE token, which confers voting and staking rights, allowing the community to have a greater say in decisions, and increasing decentralization. Aave calls this process “Aavenomics.”

“Aave is now moving towards the AaveDAO, which means that after the migration from LEND to AAVE, anyone can build new functionality into the protocol along with the Aave team, effectively decentralizing development and governance,” explained Kulechov.

The upgrade, Aave V2, also promises new features such as debt tokenization, native credit delegation, fixed-rate deposits, and gas (used for transaction fees) optimization.

The transfer rate is 100 LEND per 1 AAVE, and the new token has a market cap of almost $637 million. AAVE holders will be able to vote on the protocol and its policies, with protocol changes submitted via Aave Improvement Proposals (AIPs).

Last week, Gemini became the first major cryptocurrency exchange to list AAVE and allow custody of its token. 

Aave’s flash loans—which give users access to tens of millions in capital for a tiny fee, but only for a few seconds—have proved one of its most popular products. At the end of September, the team announced that $500 million in flash loans had been issued in the nine months since Aave launched.