A new proposal has been published to launch Aave V3 on Ethereum. Due to the drop in new users on Aave, daily revenue has dropped by more than 70% over the past year.
Aave, the decentralized lending protocol, recently launched a proposal titled “Aave Ethereum V3”, in which it asked community members for votes for the activation of the Aave V3 Ethereum pool (3.0.1).
Read Aave’s [AAVE] Price forecast 2023-2024
Under the proposal, once initial setup is complete, the pool will display pre-approved tokens such as WBTC, WETH, wstETH, USDC, DAI, LINK, and AAVE.
While Aave V3 was launched and functional on several blockchain networks, such as Avalanche, Optimism, Polygon, Arbitrum, Fantom, and Harmony, the Ethereum pool was still using the older version V2.
However, in October 2022, community members voted and approved proposal to deploy a new V3 upgrade on the Ethereum network instead of upgrading the V2 pool.
State of Aave
According to data from Defillama, Aave v2 ranks fourth in terms of total value locked (TVL) at $4.1 billion, behind Lido Finance, MakerDAO, and Curve. So far this year, the protocol’s TVL has increased by 28%.
While Aave V3 is functional on six chains, Aave V2 only exists on Ethereum, Avalanche, and Polygon. At the time of writing, Aave’s V3 was listed at $525.96 million.
According to DefiLlama, most of the activity within the Aave ecosystem occurs during the V2 deployment on the Ethereum network. 93% of the total assets locked to Aave v2, which is $4.1 billion, is on the implementation of the Ethereum blockchain.
A look at user activity on the lending protocol revealed a steady decline in the number of daily new users since May 2022. According to data from Dune Analytics, the number of daily new unique users on Aave has dropped by 96% since then.
Source: Dune analysis
How much are 1,10,100 AAVEs worth today?
The decline in the number of new users on Aave has been attributed to the steady decline in the token incentives offered by the lending platform. Token incentives are rewards or bonuses given to users who own and use the AAVE token. Some examples of token incentives offered by Aave include interest rate discounts on loans, reduced withdrawal fees, and the opportunity to earn additional interest on deposited assets.
Data from Token Terminal showed that token incentives on the lending protocol had dropped significantly by 98% over the past year, making the platform less attractive to many users.
Due to a decrease in the number of unique users visiting Aave, the daily revenue generated by the protocol has dropped over the past year. As per Token Terminal, daily revenue on Aave is down 76% over the past 365 days.
Source: Token Terminal
This post Aave V3 launches on Ethereum amid a steady drop in daily earnings
was published first on https://ambcrypto.com/aave-v3-set-to-launch-on-ethereum-amid-a-steady-decline-in-daily-revenue/
