The community behind decentralized finance (DeFi) lending protocol Aave has voted strongly in favor of launching the third iteration of the protocol on the Ethereum mainnet.
According to Aave’s governance page, all participating AAVE token holders have decided to support the proposal to launch Aave v3 on Ethereum, the protocol’s first and largest market for lending and borrowing crypto. Now that the vote has passed with 100% support from the community, the deployment of Aave v3 on Ethereum is expected to take place on 27 January.
Aave v3 — which is hailed as the “most significant upgrade” to the protocol since its launch in 2017 — will be deployed alongside its predecessor on Ethereum, giving users the option of migrating their positions from v2 to v3, or leaving them as it is. The new version will initially support seven assets, including wrapped Bitcoin (wBTC), wrapped Ether (wETH), wrapped staked Ether (wstETH), USDC, DAI, LINK, and its own token AAVE.
Aave v3 features such a efficiency mode (eMode) — which allows for maximum capital efficiency for collateral and borrowed assets with high price correlation — will be launched in a limited manner on Ethereum, and will initially support only ETH-correlated assets. Isolation mode, which enables borrowing of a newly listed risky asset, will also not be enabled in the initial launch of Aave v3 on Ethereum.
The third iteration of Aave — which focuses on improving user experience, risk management, and capital efficiency — was first rolled out back in March and deployed on six different networks, including Avalanche, Optimism, Polygon, Fantom, Harmony and Arbitrum. Ethereum was skiped at the time as it represented the largest market for the protocol, with Aave v2 having the most total value locked (TVL) than any other DeFi protocol on the network. The latest data from DeFi Llama shows that v2 on Ethereum controls more than $3.8 billion worth of assets. The proposal to launch v3 on Ethereum reads:
“While AAVE V3 was deployed to various networks right after the release, the Ethereum pool was still running V2. After careful consideration, the community decided to deploy a fresh V3 instead of upgrading the V2 pool, for increased compatibility between the V3 pools and less general complexity.”