Aave (AAVE) price has been with an absolute tear for several weeks and today the DeFi-token rallied to a new all-time high at $288. 90.
The decentralized finance protocol is one of the most popular in the market and the recent rally in the DeFi sector is among the driving stresses behind AAVE’s rally.
At the start of 2021, AAVE price was trading at $83 and the recent rally appears to have bolstered the protocol’s surging total value locked, increasing purchase volume on spot and derivatives exchanges and the carried on development of Aave’s financing platform and flash loan issuance.
TVL soars to a brand new high
Currently, Aave’s TVL rests at a new all-time high of $3. 75 billion, building the platform the second-largest DeFi platform by TVL behind Maker ( MKR ).
The steady inclusion of new tokens to the financing and borrowing protocol increases the likelihood that its TVL will continue to rise and help AAVE retain its standing as one of the top DeFi projects in the cryptocurrency room.
Staking drives demand for AAVE token
AAVE’s trading volume also surged at the beginning of 2021, rising from $200 million upon Jan. 3 to a lot of $928 million on January. 16.
As AAVE price attained a new high, it’s 24-hour trading volume notched a list $1. 06 billion. This particular volume surge is partly driven by investors acquiring more tokens for staking, with 26. 8% of the total supply of AAVE presently staked on the platform gaining an APY of six. 1%
Flash loans attract traders
Another reason for AAVE’s recent surge is the growth of its flash financial loans.
Flash financial loans allow cryptocurrency holders in order to collatoralize their portfolio to finance other purchases or brand new crypto purchases. The loans also help investors utilize the value in their tokens without having to sell see them that a taxable event.
Since launching flash loans less than 12 months ago, more than $1. 7 billion have been issued plus it’s expected that this figure will increse as the crypto bull market progresses.
As can be observed in the chart above, one of the most dominant token requested meant for flash loans is the DAI stablecoin, followed by USDC and ETH. Data from Messari shows that Aave issued $25 million in loans in the first half of 2020, 500 usd million in Q3, and nearly $1 billion inside Q4, including $450 mil in December.
The expansion of the flash loan concept will likely appeal to more users to Aave, especially since they can be used for arbitrage opportunities between DEXs, collateral swaps, self-liquidations plus a variety of other applications inside the DeFi sector.