Aave hits record high at US$288: demand for flash credits and staking rises sharply

Rising volume, demand for flash loans and a strong rally among DeFi tokens have pushed the AAVE share price to a new all-time high.

The price of Aave (AAVE) has been on an all-time high for weeks. Today, the DeFi token reached a new all-time high at 288.90 US dollars.

The decentralised financial protocol is one of the most popular on the market. The recent rally in the DeFi sector Crypto Investor is one of the driving forces behind AAVE’s rally.

At the beginning of 2021, the AAVE price was at US$83. The recent rally seems to further solidify the rising overall value of the minutes. Some of the reasons for the rise have been increasing buying volume on spot and derivatives exchanges and further development of the Aave credit platform and flash credit issuance.

Total value locked in rises to new high

Data from DeFi Pulse shows that Aave’s total included value reached US$2.03 billion on 1 January. As (BTC) and Ether (ETH) then rose parabolically, TVL also rose sharply.

Currently, Aave’s total included value is at a new all-time high of $3.75 billion. This makes the platform the second largest DeFi platform by total included value behind Maker (MKR).

With new tokens constantly being added to the credit log, it is highly likely that the total value locked in will continue to rise and AAVE will continue to maintain its position as one of the top DeFi projects in the cryptocurrency space.

Staking boosts demand for AAVE tokens

AAVE’s trading volume also jumped at the start of 2021, from $200 million on 3 January to a high of $928 million on 16 January.

As the AAVE price hit a new high, 24-hour trading volume registered a record US$1.06 billion. This increase in volume is partly due to investors acquiring more tokens for staking. 26.8 per cent of the total AAVE supply is currently used for staking on the platform, generating an annual return of 6.1 per cent.

Flash credits attract investors

Flash loans allow cryptocurrency holders to use their portfolio as collateral to fund other purchases or new crypto purchases. The loans also help investors leverage the value of their tokens without having to sell them and thus execute a taxable trade.

Since the launch of flash loans less than 12 months ago, more than US$1.7 billion has been issued. This is expected to become much more as the crypto bull market continues.

As can be seen in the chart above, the stablecoin DAI is most in demand for flash credits. This is followed by USDC and ETH. Data from Messari shows that Aave issued $25m in loans in the first half of 2020, $500m in Q3 and almost $1bn in Q4. Of this, US$450 million was in December.

The expansion of the flash loan concept is likely to bring more users to Aave. Especially as they can be used for arbitrage between DEXs, collateral swaps, self-liquidations and many other applications in the DeFi sector.