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Ethereum Based DeFi LEND is up 5,000% and gets an important update

  • Ethereum community votes for Aave governance activation.
  • Protocol will introduce yield farming with “Safety Mining” system.

In the top 3 of the Ethereum DeFi main protocols, Aave is at the top next to Uniswap and Maker. The loan protocol makes up nearly 20% of the $10 billion Total Value Locked DeFi sector with $1.95 billion, at the time of publication. This figure could be increased in the short term with the activation of Aave’s decentralized governance model.

The team behind Aave presented the proposal for Aave’s decentralized governance model with the “Aavenomics paper” at the end of July this year. In the document, the need to improve the functionality of the protocol by aligning the interests of the diverse shareholders “in a shared vision” is raised. Now, Aave’s governance model is on the mainnet and has started the voting process that allows the community to decide its activation. According to the Aave team:

Aave Governance is officially on mainnet, giving the decisional power to the community! Now it’s time to vote on the very first Aave Improvement Proposal (AIP) for the token migration from $LEND to $AAVE.

Migration from LEND to AAVE in protocol based on Ethereum

Voting is also the mechanism used by the protocol to decide the deployment of the smart contract that will turn the old Aave token LEND into the AAVE governance token. The old token will have an equivalency of 100 LEND to 1 AAVE. In total, it is estimated that the LEND supply is around 1.3 billion that will have to be converted into 13 million AAVE. The migration from one token to another will go at the pace of the LEND holders.

The token update will be implemented to give full control to the community over the protocol. In addition, it will create the Ecosystem Reserve, the Safety Module, and initiate the distribution of Safety Incentives.Therefore, investors will be able to receive rewards for staking their assets. The Aave team states:

The Safety Module is designed as an additional line of defense for Aave liquidity providers and as a way for AAVE holders to “stake” their assets in exchange for a range of rewards. This AIP’s purpose is also to dedicate a part of the ER to a kickstart incentives for the Safety Module’s first quarterly staker distribution.

Safety Incentives (SI) will have a daily reward of 400 AAVE/day, at the beginning of the Safety Module. This will be “a new line of defense for the users of the Aave protocol”, according to the Aave team, if the Governance model obtains the 65 million votes for its activation. So far, Aave’s governance website registers 59,078,588,244 votes. All have voted “Yae” (Yes) to the activation proposal. The process will culminate on September 30, 2020.

The LEND token has seen a positive perfomance since the announcement of the governance model and the Aavenomics proposal. Although in the last 30 days it has seen a drop of 29.02%, since the end of July it has risen from $0.31 to the current price of $0.56 with a all-time high reached on August 25 at $0.82.

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