Isa Kivlighan from Aave (AAVE), an open-source and non-custodial decentralized finance (DeFi) protocol for earning interest on digital asset deposits while also being able to borrow assets, states that 2020 was an “incredible year” for DeFi, as the sector grew dramatically from a little over $600 million in (total value locked) TVL in January 2020 to more than $14 billion today.
Kivlighan noted in a year in review blog post (published on January 1, 2020) that the Aave Protocol had been introduced on January 8, 2020 and it has experienced significant growth since its launch. Aave has managed to surpass $2 billion in market cap “with V1 & V2 combined.”
Kivlighan confirmed that her team released the Aave Protocol on Ethereum mainnet in January of last year, bringing innovations such as Flash loans to the DeFi and broader crypto markets.
She pointed out that Flash loans “rocked the world, and many inspiring hacks and projects were built that utilized them in new and creative ways.” She also mentioned that the Aave Ecosystem grants program was kicked off in April 2020 to provide support to initiatives developing “anything that contributes to the Aave ecosystem.”
In May 2020, the Uniswap Market was launched as “the first alternative liquidity market on the Aave Protocol,” Kivlighan confirmed. She revealed that additional markets may be coming and that “the power is in your hands now.”
In July 2020, Aave acquired an investment from 3 Arrows Capital, Framework Ventures, and Parafi Capital. The summer of 2020 saw Aave become more “decentralized with the introduction of Aavenomics and governance going live on mainnet,” Kivlighan noted.
“Credit Delegation also made its bold entrance into DeFi, with DeversiFi as the first ever to draw a credit line via Credit Delegation….[which] is now a native feature in Aave v2. [Importantly,] Aave Ltd. received an Electronic Money Authorization from the UK FCA, so Aave Ltd. is now able to issue electronic money accounts and facilitate currency conversions. This service will trial first in the UK, making it easier than ever for new users to onboard into the world of DeFi.”
The introduction of the Genesis Governance “prompted the first ever vote on the token migration from LEND→ AAVE,” Kivlighan noted. She added that the token migration is going on right now as well, however, most of the tokens have “migrated” to the AAVE token, which is referred to as the governance token of the DeFi protocol. She explained that this migration “effectively jump-started the Aavenomics.”
She also mentioned that hte Admin Keys for the protocol were “handed over to the governance after the first governance voting.” After this, discussion began to pick up in the governance forum, which made it clear that the Aave community had various ideas for the ongoing development of the decentralized protocol and was eager to actively take part in making decisions.
She confirmed that Version 2 of the Aave Protocol on mainnet has offered innovations such as a Yield and Collateral Swap, Flash Liquidations, Batch Flash Loans, and other features.
She added that V2 governance was also activated. It aims to take governance innovation “to the next level by implementing a segregation between proposition and voting power, upgraded voting strategies, multiple executors, and a guardian for extra security.”
While sharing other updates, Kivlighan noted:
“Aave Protocol V2 launched on the 3rd of December, now surpassing $200m in just under a month. In less than a year the Aave money market has reached $2.3B of liquidity across the 2 versions of the protocol. This has been accompanied by large transaction volume on the protocol both in terms of deposits and redeems but also for borrowing with outstanding loans reaching a record level of $638M.”
“This results in a record income for depositors standing at $2.7M…. The assets that have generated the most income are USDC, USDT and DAI.”