The price of Aave (AAVE) has been on an all-time rift for weeks and today the DeFi token rebounded to a new all-time high at $ 288.90.
The decentralized financial protocol is one of the most popular on the market and the recent rally in the DeFi sector is one of the driving forces behind AAVE’s rally.
AAVE / USDT 4 hour chart. Source: TradingView
At the beginning of 2021, the AAVE price was trading at $ 83, and the recent rally appears to have bolstered the rising total value of the log, increased buying volume on the spot and derivatives exchanges, and the advancement of Aave’s lending platform and flash lending.
TVL rises to a new high
Data from DeFi Pulse shows that Aave’s TVL rose from $ 2.03 billion on Jan. 1, and as the price of (BTC) and ether (ETH) went parabolic, Aave’s TVL also rose.
Total value locked on AAVE. Source: DeFi Pulse
Currently, Aave’s TVL is at a new all-time high of $ 3.75 billion, making the platform TVL’s second largest DeFi platform after Maker (MKR).
The steady addition of new tokens to the borrowing and borrowing history increases the likelihood that its TVL will continue to rise and help AAVE maintain its reputation as one of the top DeFi projects in the cryptocurrency space.
Staking increases the demand for AAVE tokens
AAVE’s trading volume also spiked in early 2021, rising from $ 200 million on Jan. 3 to a high of $ 928 million on Jan. 16.
AAVE price vs. reported trading volume. Source: TheTIE
As the AAVE price hit a new high, the 24-hour trading volume hit a record $ 1.06 billion. This increase in volume is partly due to investors buying more tokens for staking, with 26.8% of the total supply from AAVE currently deployed on the platform bringing in an APY of 6.1%.
Lightning loans attract investors
Another reason for AAVE’s recent surge is the growth in its flash loans.
Flash loans allow cryptocurrency holders to assemble their portfolios to fund other purchases or new crypto purchases. The loans also help investors get the value of their tokens without having to sell them and causing a taxable event.
More than $ 1.7 billion has been spent since flash credit was launched less than 12 months ago, and that number is expected to rise as the crypto bull market advances.
Total Flash Loan Spend so far on AAVE. Source: Messari
As can be seen in the graphic above, the DAI stablecoin is the most dominant token requested for flash loans, followed by USDC and ETH. Data from Messari shows that Aave extended $ 25 million in loans in the first half of 2020, $ 500 million in the third quarter, and nearly $ 1 billion in the fourth quarter, including $ 450 million in December .
The expansion of the flash credit concept is likely to attract more users to Aave, especially as it can be used for arbitrage opportunities between DEXs, collateral swaps, self-liquidations and a variety of other applications within the DeFi sector.