The third version of the Aave crypto lending app has now been deployed on Ethereum for the first time, according to a Jan. 27 tweet thread from the Aave team. “Aave V3” was originally released in March 2022 and was soon after implemented on various Ethereum Virtual Machine (EVM) compliant blockchains. Until now, Ethereum users only had access to the older “V2” version of the app.
Aave Protocol V3 is now available on the Ethereum marketplace
“The most exciting aspect of V3 is its flexible design, enabling a variety of new risk mitigation features and its improved capital efficiency and decentralized liquidity, all while reducing gas costs.” @StaniKulechov pic.twitter.com/QsSnnlhEMr
— Aave (@AaveAave) January 27, 2023
Aave V3 includes several features aimed at helping users save on fees and maximize the efficiency of users’ capital. For example, high-efficiency mode allows the borrower to avoid some of the more stringent risk parameters in the application if the borrower’s collateral is highly correlated with the asset being borrowed. The developers say this can be useful for borrowers of liquid staking stablecoins or derivatives.
Additionally, the “isolation” feature allows certain riskier assets to be used as collateral as long as they have their own debt limit and are only used to borrow stablecoins. In the previous version, there was no way to limit what type of asset could be borrowed given a certain type of collateral. This meant that smaller market capitalization and illiquid coins often could not be used as collateral.
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V3 also includes a gas optimization algorithm that the developers say will reduce gas rates by 20-25%.
The code for V3 was released in November 2021. In March 2022, Aave DAO passed an initial vote to implement the new version. Over the next several months, V3 was deployed to Avalanche (AVAX), Arbitrum (ARB), Optimism (OP), and Polygon (MATIC). However, the Ethereum version of Aave has always had the most liquid and V3 was previously unavailable.
According to the official proposal, the initial release only features seven coins. Voting for the release began on January 23 and lasted for two days. After supporters won the vote, implementation of the proposal was able to move forward on January 27. Less than 0.01% of DAO members voted against the proposal.
In November 2022, Aave changed its governance procedures after it was hit by a $60 million short hack that ultimately failed.
