The Aave (AAVE) price has been at an all-time low for weeks and today the DeFi token rose to a new all-time high at USD 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 the AAVE 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 soaring total value of the log, increasing the volume of purchases on spot and derivatives exchanges, and advancing Aave’s lending platform and flash loan issuance .
TVL hits a new high
Data from DeFi Pulse shows that Aaves TVL rose from $ 2.03 billion on Jan. 1, and as the price of (BTC) and ether (ETH) rose parabolically, Aaves TVL rose too.
Total value locked on AAVE. Source: DeFi Pulse
Currently, Aaves TVL is at a new all-time high of $ 3.75 billion. This makes the platform after Maker (MKR) the second largest DeFi platform from TVL.
The steady addition of new tokens to the credit and credit history increases the likelihood that the TVL will continue to rise and helps 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 early in 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 purchasing more tokens to use. 26.8% of the total offering to AAVE currently deployed on the platform generates an APY of 6.1%
Flash loans attract investors
Another reason 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 utilize the value of their tokens without having to sell them to see them and create a taxable event.
More than $ 1.7 billion has been spent since flash lending started less than 12 months ago, and that number is expected to increase as the crypto-bull market advances.
Total flash loan issuance to date 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 in the DeFi sector.