Will AAVE Price Rally Following Aave Protocol Upgrade?

AAVE began the year 2024 on a slow note but the overall look at the AAVE price shows it is gaining significant momentum. It rose over 118% in a year even though last week seemed sluggish. However, the protocol recently launched the v3.2 upgrade, and experts think that could boost the AAVE price rally.

This upgrade raises an important question as to whether this would continue and the protocol could make a new high, probably above the $200 level. The big question now is whether the momentum will persist as it reaches significant resistance levels.

AAVE Price Dips, But v3.2 Upgrade Signals Strength

Analysis of the recent AAVE price action reveals that the price has indeed been positive since October 2023, as it followed an ascending support trend line. Indeed, it successfully made multiple attempts to break above the resistance level of $150.

While the recent upgrade to Aave v3.2 has undoubtedly equipped the protocol with significant new functionalities that could underpin price rally.

Overall, the upgrade improves capital efficiency and user experience, both elements that could sustain growth. But at key resistance zones, the move into new highs would be highly contingent on wider market conditions at key resistance zones, user adoption in the feature set updates, and any influences emanating from regulatory development or overall market sentiment of the DeFi market.

In August 2024, the DeFi token price managed to close above this pivotal resistance, marking a breakout. After that, it reached the highest weekly close since 2022, including a new yearly high of $177.21 on November 23.

According to Michael Nadeau, founder of the DeFi report, this protocol is way ahead of its closest rivals, commanding an astonishing 64% share of the lending and borrowing market. At the same time, it has 4.6 times more active loans compared to its closest competitor, Spark Protocol.

As a matter a fact, this protocol has, together with MANA  and GRT recently emerged as three altcoins that could enjoy a price surge as the crypto market rebound.

While AAVE is indeed one of the top DeFi protocols, it should be duly noted that its active loans and TVL are around 60% lower than their all-time highs, with 84% of its loans currently deployed on the Ethereum network.

Efficiency Boost for DeFi Darling Amidst Market Volatility

The DAO is making an upgrade to v3.2-an upgrade that sets ground for a number of key improvements to the user experience and efficiency of the protocol.

Aave DAO launches the v3.2 upgrade, developed by @bgdlabs.

Introducing Liquid eMode for greater control and flexibility over borrowing and collateral, users benefit from improved gas efficiency and customizable risk management. pic.twitter.com/NKf298JNEQ

— Aave Labs (@aave) October 8, 2024

Among these is Liquid eMode, which introduces more granular control for users over borrowings and collateral management through the ability to choose different eModes for listed assets. This new upgrade improves gas efficiency and could lower transaction costs for users, while offering extensive risk management options for one’s financial strategies.

Also, the removal of deprecated stable rate logic cleans up the operations and improves capital efficiency, which makes the protocol more attractive for those users that want to optimize their assets. This change had been discussed in the community and through governance proposals, reflecting active community involvement with the development of AAVE.

The v3.2 upgrade could positively influence AAVE price by enhancing the protocol’s efficiency and user experience, which may attract more users and increase total value locked (TVL). Additionally, improvements such as Liquid eMode and customizable risk management options could make the protocol more competitive in the DeFi lending market, potentially driving demand for AAVE tokens as users engage more actively with the platform.

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Teuta

Teuta is a seasoned writer and editor with over 15 years of experience in macroeconomics, technology, and the cryptocurrency and blockchain industries. Starting her career in 2005 as a lifestyle writer for Cosmopolitan in Croatia, she expanded into covering business and economy for several esteemed publications like Forbes and Bloomberg. Influenced by figures like Don Tapscott and Bruce Dickinson, Teuta embraced the blockchain revolution, believing crypto to be one of humanity’s most crucial inventions. Her fintech involvement began in 2014, focusing on crypto, blockchain, NFTs, and Web3. Known for her excellent teamwork and communication skills, Teuta holds a double MA in Political Science and Law, enjoys punk rock, chablis, and has a passion for shoes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.