- AAVE price fell to $80 on Tuesday after failing to break the $88 resistance level.
- If this proposal passes, Aave will be able to run V3 on the world’s largest DeFi blockchain.
- Ethereum is Aave’s largest market, so instead of upgrading V2, a new V3 will be deployed on the blockchain.
Aave has been a leader in the Decentralized Finance (DeFi) space for a very long time, once establishing itself as the largest DeFi protocol. Despite losing his 77.89% of total value locked to the platform, Aave is still the world’s largest lending protocol thanks to multiple iterations, the latest of which is his V3.
Aave V3 Coming to Ethereum
Aave proposed rolling out a third iteration on Ethereum in his latest governance proposal. If this proposal is approved, the Aave V3 Ethereum pool will be active and 7 pre-approved tokens will be listed on the platform, including USD Coin (USDC), DAI, LINK and AAVE.
Since its March 2022 release, Aave V3 has been deployed on multiple blockchain networks including Polygon, Optimism, Avalanche, and Arbitrum. However, the decision to deploy to Ethereum almost a year later seems calculated to eliminate the bugs present within V3.
This is because Ethereum is the largest market when it comes to lending and borrowing, with Aave largely dominating with a TVL of $4.5 billion.
Voting on governance proposals is still ongoing, with 100% approval rate, and V3 will be deployed to Ethereum on January 27th when the approval rate reaches 100%. Ethereum is their biggest market, so instead of upgrading the new version of the V2 pool, the Aave community decided to upgrade to V3.
This way there is better compatibility between V3 pools and less complexity in general.
AAVE price mismatch
AAVE prices surprisingly did not react positively to this development as the altcoin fell more than 7.5% on Tuesday. may be trading at $80 even though the
However, this is not the end of AAVE’s rally as the bearish impact did not cause the price to drop. This decrease is a result of AAVE’s cooldown after being up nearly 70% of his. Therefore, once the altcoins settle down, an upside is likely if the cryptocurrency bounces off the $77 support level.
This gives AAVE price another shot to break the immediate resistance of $88, allowing the cryptocurrency to rise towards $96. Flipping this level to the support floor is very important for altcoins. Only then can it move further towards the next resistance level of $103.
AAVE/USD 1-day chart
However, if the cooldown enters a correction and AAVE loses support at $77, a further drop towards $69 and $67 is possible. Losing the latter would send the price down to the critical support level of $58, and if the daily candlestick falls below the same level, it would invalidate the bullish thesis and all gains of the last three weeks.