Komal Joshi · Oct 22, 2020 . 5min read
Money Market Protocol Aave Breaks all Records with DeFi Flash Loan of $14 Million
After replacing Maker as the DeFi King, Aave, DeFi Money Market protocol witnesses the biggest DeFi Flash loan of $14 Million.
By Komal Joshi · Sep 2, 2020 . 5min read
Aave, the decentralized money market protocol, smashed records as the community affirmed a large flash loan of $14 million worth of the stablecoin DAI. On August 29, a user concluded Aave’s biggest flash loan of $14 million worth of DAI. To date, Aave has witnessed $300 million in flash loans. More than half of the aggregate of flash loans settled during August. In just a short period, the Aave protocol is in the limelight.
Aave implies the Finnish word for ghost. It is an open-source and non-custodial protocol enabling the creation of money markets. It is a decentralized finance (Defi) protocol. Recently, it supports 19 tokens, including ethereum (ETH). According to the data, the total-value locked (TVL) is around $1.5 billion.
In addition to the standard features seen on Compound protocols, Aave involves notable distinguishing characteristics such as uncollateralized loans, “rate switching,” Flash Loan, and unique collateral types. Aave leverages a native token LEND that provides holders with discounted fees. Often referred too as ETHLend, the LEND cryptocurrency token has rolled over to become the native token of Aave.
Advantages of Aave’s Flash Loans
Flash loans have quickly become one of Aave’s significant selling points, namely because they need zero collateral to use. Instead of guaranteeing repayment with collateral, it relies on the loan’s repayment timing. The loan is approved as long as it is used and paid back in full by filing it in the same block. Moreover, if the repayment of the loan is not in the same block, the entire transaction declines. It opens the doors for safe and secure arbitrage opportunities at virtually no cost to the user.
Aavewatch statistics show that during the last two months, people using flash loans have expanded exponentially. The Aave website emphasizes that the loans are for developers. Despite the website highlighting that flash loans are for developers, several people without programming abilities are using these types of uncollateralized loan options.
Earlier, the highly adaptive and innovative money market protocol, Aave flipped Maker as the new DeFi king. With 1.47 billion USD Total Value Locked – TVL, Aave displaced Maker, which until now was the dominant platform within the DeFi industry.
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