What’s hot about Proposal V3 of the leading DeFi protocol Aave?

The leading DeFi protocol Aave is currently conducting a governance vote on the implementation of V3. According to one post Recently, a V3 protocol update was required to keep up with the ever-evolving DeFi ecosystem.

“After the past 2 years of significant growth, the Aave Request for Comment (ARC) proposal was submitted to the Aave administration to seek approval from the community to implement a new version of the Aave protocol: Introducing Aave V3.”

Voting on Snapshot is still ongoing, with current results showing almost 100% of the votes in favor of Proposal V3.

The source: snapshot

What’s hot about V3??

Aave V3’s proposal underscores the growing importance of cross-chain compatibility and moves towards Layer 2 protocols on Ethereum. The developers also mentioned increasing capital efficiency and improving the user experience through better security.

“The design of V3 is poised to create the next-generation DeFi Layer-0 protocol that can dramatically improve the user experience while offering greater capital efficiency, decentralization and security.”

Probably the most important update is the “portal”, which enables users to move the provided liquidity across different blockchains. This feature uses the profitable token AAVE or aToken for short.

User-provided liquidity can be transferred across different networks by burning aToken on the source network and minting it on the destination network. Portal is the network connection point that supports this function.

“Portal will be able to connect solutions like Connext, Hop Protocol, Anyswap, xPollinate and others that use the liquidity of the Aave protocol to facilitate cross-chain interaction.”

Aave Governance can grant anyone cross-chain protocol access to ports upon receipt of a proposal.

The expected result is greater capital efficiency as users can move assets where they are needed for maximum returns.

Aave ceaseless efforts To become the leading DeFi lending platform

With a locked down value of $ 14 billion, Aave ranks behind Maker ($ 18 billion) in terms of top credit history.

To beat Maker, Aave also wants to tackle risk management in the new V3 protocol. Special:

– Limiting supply and borrowing to minimize bluffing or price manipulation and bankruptcy of the liquidity pool.

– Detailed borrowing controls to change collateral factors for future borrowers without affecting the location of existing borrowers or triggering liquidation.

– The risk administrator with the addition of the license list only gives the green light to those entities that are authorized to change risk parameters without an administrative vote.

– Oracle price tracking to include the grace period for liquidation, to disable borrowing in certain cases.

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