Leading decentralized finance (DeFi) coin LEND, the native token of the Aave protocol, is up 5% in the past 24 hours. Its performance comes as the prices of both Bitcoin and Ethereum have stagnated.
LEND’s outperformance seems to stem from a crucial technical change to the Aave protocol and the cryptocurrency itself. This technical change should imbue LEND with more intrinsic value, which should in turn drive prices higher.
The DeFi coin is down due to a marketwide correction that began at the start of this month. Even up 5% in the past 24 hours, trading for a price of $0.55, it is a few dozen percent below its all-time high price set in August.
Aave’s LEND Gains 5% Despite Stagnation in Bitcoin Price
Announced just a week ago, LEND is being transformed into a new cryptocurrency called AAVE. AAVE is the governance token of the Aave protocol that will allow users to dictate in what direction the DeFi app heads.
AAVE has more intrinsic value than LEND because it can be used as a voting mechanism and it can be staked to allow DeFi users to earn rewards over time. As the Aave Improvement Proposal outlining this change explains:
“This AIP, if accepted by the community, will slowly deprecate the LEND asset in favour of the AAVE asset. As stated in the Aavenomics, this token upgrade will also create the Ecosystem Reserve (ER), the Safety Module (SM), and start the Safety Incentive (SI) rewards distribution. The Safety Module is designed as an additional line of defense for Aave liquidity providers and as a way for AAVE holders to “stake” their assets in exchange for a range of rewards.”
Top VCs Support The Project
Adding to the strength in the value of the DeFi coin, top venture capitalists in the space have pledged their support for Aave.
Spencer Noon, head of DTC Capital, commented that the fact the Aave protocol has nearly $2 billion in assets in its contracts despite liquidity mining goes to show the project’s value:
“One of the best signals of PMF in #DeFi is if a project can succeed w/o extra incentives (liquidity mining). @AaveAave doesn’t have LM yet it’s still one of the biggest beneficiaries of new yield farming activity. At $1.26B TVL and only $759M mcap—the fundamentals are so strong.”
This optimism was echoed by other top DeFi investors.
Related Reading: MicroStrategy’s Stock Continues to Soar After Bitcoin Purchase
Featured Image from Shutterstock Price tags: lendusd, lendbtc, aaveusd, aavebtc, aaveeth, lendeth Charts from TradingView.com Ethereum DeFi's Aave (LEND) Gains 5% Amid Crucial Technical Change