Crypto lending protocol, Aave, has deployed its third version upgrade (V3) on the Ethereum network following a successful unanimous vote for a governance proposal.
Announcing this in a Twitter post, Aave said the community’s unity has led to the deployment of its V3 on the Ethereum Mainnet. They also stated that the best part of the upgrade is its flexible design.
Aave’s protocol V3 was deployed earlier in March 2022 across six networks, including Avalanche, Polygon, Arbitrum, and Optimism. However, after several tests on these networks, Aave governance voted to deploy on the Ethereum Network.
The upgrade incorporates a flexible architecture that helps mitigate user risk and improve capital efficiency when staking or borrowing related assets like stablecoins and liquid staking derivatives (LSDs).
According to Aave’s statement,
“V3 was designed with a flexible architecture for increased composability and made it possible to build a variety of innovative features on top of the protocol, such as new risk management tools that provide additional security and stability.”
Another exciting feature of the V3 is the high-efficiency mode, also called E-mode. With this, users have higher borrowing power when the collateral provided is correlated to the assets they are depositing and borrowing at the time. This enables users to make the most of their collateral and improves capital efficiency.
The Isolation mode allows users to supply assets as collateral when borrowing only stablecoins. This unlocks listings for less liquid assets without impacting the main market.
V3 also incorporates gas optimization by reducing gas fees by 25%, reducing transaction costs. It also improved logic, making the codes readable, modular, and optimized.
