Everything you need to know about Aave’s V3 rollout and what the future holds for AAVE

  • AAVE’s V3 to offer more flexibility for users
  • AAVE is witnessing some demand from top whales in anticipation of the rollout

The Aave protocol and its community are currently preparing the rollout of the Aave protocol V3. The latter will specifically target Ethereum [ETH] the market, where it can be a big deal. A recent update by Aave’s founder, Stani Kulechov, revealed why the rollout is of great importance.

Read AAVE’s price forecast 2023-2024

A historical overview of Aave can be useful to understand why Aave Protocol V3 is important. According to the founder, DeFi summer and flash loans were central to the network’s growth after Aave’s V1 rollout. The V2 launch was supported by more innovation and heavy effort. However, it also highlighted some risks, which developers plan to address in Aave V3.

Kulechov noted that one of the key features planned for Aave V3’s Ethereum mainnet rollout is more flexibility for users. The new version will offer more flexibility in betting, especially in risky market conditions.

Aave v3 users will be better positioned to implement measures to reduce risk during volatile and adverse market conditions. This move shows the protocol’s efforts to make the platform safer for users in the future.

What are the potential implications for AAVE?

Adding an extra layer of security for users can be encouraging for future users. If that turns out to be true, Aave will likely achieve a high TVL in a short time, just like it did with previous iterations.

But at the time of writing, AAVE was still struggling to recover from the crash in the first half of November. The upgrade could revive whale interest in the token.

Source: Glassnode

If the top addresses buy up AAVE again, it could have positive price action. AAVE’s supply distribution this week already indicated that there was some demand from the best whale categories.

For example, addresses with between 100 and 10,000 coins significantly increased their balances in the last 24 hours up to press time.AAVE supply distribution

However, there were some outflows from higher address categories. Despite this, currency flows indicated that the selling pressure slightly offset the prevailing buying pressure. Currency flows have not recovered from the sharp fall in November. Slightly higher currency inflows than outflows led to a net flow in favor of the downside.

AAVE exchange flows

Source: Glassnode

Investors should note that AAVE’s demand was also highly correlated with the rest of the market. This meant that AAVE’s ability to bounce back may depend on DeFi’s market demand, which would require market conditions to improve first.

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