Aave Protocol has become the latest DeFi project to transfer governance rights to its token holders, giving its community control over the future of the protocol.
“Today marks a historic moment for the Aave Protocol: we have officially handed over the protocol admin keys to the governance, an important step towards decentralisation!”, Aave wrote on Thursday.
AAVE holders can vote on AIPs (proposals for updates and changes to the protocol) and they can also stake their AAVE in the protocol Safety Module and earn Safety Incentives in exchange for securing the protocol.
AAVE’s total supply is 16 million tokens, 13 million of which are redeemable by LEND holders, with the remaining three million tokens allocated to an “ecosystem reserve.” In addition to voting on AIPs, AAVE holders can stake their tokens to earn a share of protocol fees, and can also stake an AAVE/ETH pairing on Balancer to earn BAL tokens alongside trading fees.
Aave launched back in January 2020, emerging as a top DeFi project as the sector began to heat up mid-year. The protocol facilitates the issuance of ‘flash-loans,’ describing such as “the first uncollateralized loan option in DeFi.”
Source: Defipulse
Aave is currently the fifth-largest DeFi protocol by total value locked (TVL), holding $986,1 million. Uniswap, the largest DeFi protocol is holding more than $2,69 billion.
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