Aave’s Market Ranking of DeFi Platform Increased with Instant Loan Application
Decentralized finance ( DeFi ) credit protocol Aave has seen an explosion in the number of requests for Flash Loans (Flash Loans) since the beginning of July, the daily value of those loans has exceeded $ 130 million as of July 27 .
According to DeFi Pulse, the record loan amount made Aave the fourth largest DeFi protocol in terms of locked funds. It also caused the capital currently connected to the project to be about $ 393 million.
The value of Aave’s LEND token increased by about 500% in less than two months, and the LEND price climbed to local high levels above $ 0.3. Aave is now the 34th largest crypto asset with a market cap of $ 362 million.
Flash Loans raise Aave’s market ranking
Aave defines flash loans as “the first unsecured loan option in DeFi”; The application allows investors to borrow instantly provided that liquidity is returned to the pool “in a transaction block”.
Credits are designed to be used for arbitrage and collateral exchange, which allows users to provide instructions through a smart contract to trade. A 0.9% commission is charged on earnings from transactions and the fee is distributed among the liquidity providers of the platform.
If the borrower fails to meet the loan requirement, “the entire transaction is reversed to effectively undo transactions carried out up to that point” and provides the security funds in Aave’s reserve pool.
Flash Loan had damaged bZx
Although it is new in Aave, flash loans; Since the launch of the open source banking protocol Marble in 2018, it has been part of the crypto ecosystem.
However, flash loans are a liquidity provider that manipulates the oracle pricing system to purchase thousands of tokens at extremely discounted prices; In February, the DeFi credit platform was badly used on the bZx, resulting in a $ 1 million loss.
The crypto exchange Coinbase said it predicted that more “flash credit” attacks will target the DeFi ecosystem in the future after the attack.