Just a day after the launch of Aave Governance, the new governance platform for decentralized lending protocol Aave, the protocol’s community must make its first decision: whether to deprecate the platform’s governance token, LEND, and instead migrate it to a new one, AAVE. This is no small feat: LEND currently has a market cap of $705 million.
The team behind the decentralized finance (DeFi) protocol announced the proposal (called an Aave Improvement Proposal), on Friday. Should the proposal, which appears largely ceremonial, pass when voting closes after four days, the protocol will get rid of the very LEND used to launch AAVE into existence and convert all LEND tokens to AAVE tokens at a rate of 100:1.
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Aave is a non-custodial lending protocol. It lets its users lend and borrow cryptocurrencies with little collateral. With $1.54 billion worth of cryptocurrency locked into its smart contracts, Aave is one of the biggest DeFi projects around, third only to Maker and Uniswap.
AAVE tokens are similar to LEND tokens in that they allow holders to make decisions on how to improve the network. But the new AAVE token lets holders do more with the protocol, such as staking tokens in a “Safety Module” that acts as an insurance in case of a deficit on the platform. For this, stakers earn a percentage of the protocol’s fees.
As it stands, anyone using its protocol earns LEND. LEND is also available on exchanges and many invest in it as a speculative asset. It has exploded with value this year. The current price of the token stands at $0.56—a 2,675% increase since January, according to CoinMarketCap.
Aave Governance is officially on mainnet, giving the decisional power to the community! Now it’s time to vote on the very first Aave Improvement Proposal (AIP) for the token migration from $LEND to $AAVE.
Thread on how to vote⬇️
Blog post for details: https://t.co/Z09ajBmb2Y
— Aave (@AaveAave) September 25, 2020
Aave calls its plan for decentralization “Aavenomics.”
“Decentralization is the Aave ethos, and the goal was always to give the decisional power to the community,” Aave said in a blog post.
Aave started as Ethlend in 2017 and rebranded in January 2020. It offers crypto lending and borrowing capabilities and introduced flash loans—super-quick loans that are issued for the duration of a single Ethereum block.
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