Less than a year after the release of the version one mainnet, the popular DeFi project Aave has launched the second version with several network upgrades.
The native cryptocurrency reacted with a sudden price increase of 15% in a matter of hours.
Aave Mainnet V2 Is Live
The decentralized lending protocol allowing users to lend, borrow, and earn interest on various cryptocurrency assets launched its V1 mainnet at the start of 2020. By being an active part of the mid-2020 DeFi boom, the protocol surged to a market size of over $1 billion.
The team announced the release of the V2 mainnet yesterday with several network upgrades, including an improvement of the first undercollateralized loan option in the space – Aave’s Flash Loans.
An update of the yield and collateral swap will enable users to “trade their deposited assets, across all currencies supported in the Aave protocol, even when they are being used as collateral.” The company believes that this option will help customers avoid liquidations.
Aave has also simplified the repayments. If users wanted to use their collateral to repay a loan in the V1, they had to withdraw it, use it to buy the borrowed asset, and finally repay the debt and unlock the deposited collateral. This four-step transaction process has been replaced by a new feature allowing users to close their loan positions by paying directly with the collateral.
The project has also upgraded the flash liquidations, batch flash loans, debt tokenization, and the native credit delegation.
As far as the migration of liquidity to V2 goes, users can employ a Flash Loan-powered migration tool to make the transition without having to close the V1 loan positions. The tool will be available soon.
Aave’s Immediate Price Reaction
The protocol’s native cryptocurrency went through a significant change earlier this year. The former token LEND was renamed AAVE, and it underwent a 100:1 token split.
The new coin went on a roller-coaster since yesterday’s V2 mainnet announcement. AAVE traded at about $83 before exploding by nearly 15% to a daily high of $95.
However, the volatility continued in the following hours and the digital asset has retraced to approximately the same levels as yesterday.