AAVE Decentralizing with the LEND to AAVE Token Migration

AAVE Decentralizing with the LEND to AAVE Token Migration

By GabrielHaines | Gabriel | 5 Oct 2020


MIGRATION FROM LEND TOKEN TO AAVE TOKEN

AAVE is a lending and borrowing protocol that’s been around since 2017. The next stage of their evolution is underway, as they move toward greater decentralization and community governance. With more than $1.5 Billion under management, it’s one of the more trusted protocols in the DeFi space.

They’ve written a detailed 33-page Aavenomics document which goes into far greater detail on the rationale for the changeover and the greater role that the community will play. We’ll just look at some of the key features briefly.

Image for post

One big change is the supply is being reduced by a factor of 100; the LEND to AAVE exchange rate is 100:1. In the example below, 2,840 LEND converts to 28.4 AAVE. This is basically a reverse stock split, lowering the total number of tokens by a factor of 100. This is all access to the Migration Portal. It’s a two-transaction process; first you approve and then you migrate.

Image for post

AAVE STAKING MODULE

In addition to access to community governance, another reason you’ll want to migrate your tokens is because it grants you access to the staking module. The staking is detailed in the aavenomics paper, but briefly, the Safety Module is a staking mechanism of AAVE tokens to act as an insurance against ‘Shortfall Events’. While these shortall events haven’t been clearly defined, it likely relates to abrupt drops in collateral asset valuations. That means there is risk in participating in the staking of AAVE tokens, but the reward is a projected APY of 10–15% for stakers. So this isn’t a typical staking yield farm, this is explicitly asking you to assume some risk for the community by staking your tokens.

Image for post

A note on aLEND migration: according to AAVE founder @stani.eth, a simple way to migrate without repaying will be created once the governance votes on listing AAVE.

WRAP UP

AAVE is our preferred product for borrowing and lending in the DeFi space, it’s a great protocol with a solid community. It’s making money with a solid product and one of our favorite DeFi tokens.

A note on aLEND migration: according to AAVE founder @stani.eth, a simple way to migrate without repaying will be created once the governance votes on listing AAVE.

WRAP UP

AAVE is our preferred product for borrowing and lending in the DeFi space, it’s a great protocol with a solid community. It’s making money with a solid product and one of our favorite DeFi tokens.

If you’d like to donate ETH/ERC-20, it’s appreciated! Haines.eth

Make sure you are subscribed on Youtube for the latest tutorials, news and interviews

Follow me on Twitter for memes, hot takes, and more DeFi

Join my public Telegram group for 24/7 crypto chat

For high level strategy and bleeding edge alpha join my private telegram group

How do you rate this article?


14

1


Gabriel
Gabriel

I make crypto content Make sure you are subscribed on Youtube for the latest tutorials, news and interviews Youtube.com/gabrielhaines Follow me on Twitter for memes, hot takes, and more DeFi twitter.com/gabrielhaines

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.