AAVE is back after a temporary setback and is preparing for the upcoming AIP
Spot operations had some impact on DeFi protocols. However, what will happen to AAVE will also have some impact. November 1st will be an important day for this token in many ways.
AAVE 4 Hour Price Chart | Source: Tradingview
AAVE fluctuates a lot
This week has been a roller coaster ride for the DeFi Protocol. On October 29, AIP (AAVE Improvement Proposal) proposed to disable xSUSHI and DPI token borrowing on AAVE V2 as a precautionary measure.
This came after members of the AAVE community raised concerns about a potential vulnerability related to the use of xSUSHI as a security. Although there was no specific damage if xSUSHI was hacked, the API is still up for voting.
The proposal was voted on on October 30th and only 1 objection was raised out of 58.8782 votes. Therefore, the AIP is expected to be implemented on November 1st.
Select AIP AAVE to disable xSUSHI and DPI | Source: AAVE
Coincidentally, AAVE’s variable APY rose to 29% on October 29th. It did so after the log got into a liquidity crisis due to large withdrawals mainly spearheaded by Justin Sun, as reported by Bitcoin Magazine. Some people even Call it’s mass withdrawal.
AAVE variable APY (green) | Source: AAVE
In either case, this resulted in the Total Locked Value (TVL) of the DeFi protocol falling 26% from $ 19 billion to $ 14 billion in a 24-hour period. AAVE also had a very volatile day on October 27th. At its peak, the token rebounded 47% before falling back and closing at a constant -1.61%.
Investors took advantage of the upside and took profits as selling activity confirmed on all fronts. The number of trades and volume on October 27 was the highest ever at $ 1.7 billion.
AAVE trading volume | Source: Intotheblock
Even Long Term Owners (LTH) are moving or even selling assets as over 95.66 million days have been consumed in a single day.
Age of Consumption AAVE | Source: Santiment
Fortunately, all of the volatility subsided the next day as most of the AAVE sold was also bought back. However, since the new AIP is slated to be implemented on November 1st, we can only wait and see how it will affect the token and the network.
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According to AMBCrypto