One of DeFi’s leading platforms, Aave, is about to have a big token migration following the first vote on its new governance system which has recently gone live on mainnet.
The first vote for AIP1 under the new decentralized governance mechanism was for approval of migration of the current LEND tokens to new AAVE tokens. Previous governance voting took place on the Kovan and Ropsten testnets until it went live on mainnet on Sept 26.
The move will take Aave a step closer to full decentralization as community governance can now determine the future direction of the protocol.
Aave Governance is officially on mainnet, giving the decisional power to the community! Now it’s time to vote on the very first Aave Improvement Proposal (AIP) for the token migration from $LEND to $AAVE.
Thread on how to vote
Blog post for details: https://t.co/Z09ajBmb2Y
— Aave (@AaveAave) September 25, 2020
The token upgrade will also introduce an Ecosystem Reserve, Safety Module, and initiate a Safety Incentive rewards distribution. These will act as additional safety layers for the protocol in order to maintain liquidity.
Token Supply to Be Slashed
Essentially, every 100 LEND will be converted to 1 AAVE with a total supply of AAVE capped at 16 million. 13 million of those tokens will be redeemed by current LEND holders while the remaining 3 million will go into the Ecosystem Reserve. There will be no deadline for the migration which will be automatically initiated once the voting period has concluded.
Holders of the new AAVE tokens will be able to stake them in the Safety Module. Initially, 400 AAVE per day will be distributed to stakers. The concept has been termed ‘safety mining’ as it incentivized token holders to stake them in order to make the network more secure.
The announcement added that liquidity pools for AAVE/ETH will be added later if voted upon by governance.
Many crypto investors seem bullish about the future of the platform:
LEND, about to become AAVE.
And it won’t take years. Several other quality DeFi assets also ready to fleet up on the market cap charts.
— DCinvestor | Aftab (@iamDCinvestor) September 30, 2020
LEND Price Update
According to Coingecko, the current circulating supply of LEND is 1.25 billion with a market capitalization of $663 million, ranking the token at 32 in the capitalization charts.
LEND is currently trading at $0.52, down 8% on the day. Considering the token supply migration at a ratio of 100:1, this could mean a potential $50 per AAVE, but this of course is not guaranteed.
The all-time high for the LEND came at the end of August when it reached $0.83. It has fallen 37% since then but the migration and new staking opportunities may send prices back up once again.