Aave announces V3 update to introduce cross-chain feature and support for Layer-2 networks

Decentralized finance lending protocol Aave has announced the next update, V3, which will include improvements to user experience, risk management and the token listing process. The blockchain aims to create the next-generation Layer-0 DeFi protocol and introduce new features.

Aave to become next generation Layer-0 DeFi protocol

Aave recently published an update regarding its V3 upgrade, which will introduce new features on the platform. The DeFi protocol will aim to improve user experience, capital efficiency, decentralization and security.

The listing of new assets would also be decentralized, allowing Aave governance to grant entities the right to list cryptocurrencies on the platform through an on-chain vote. This would become more efficient on V3, as the current listing process requires a proposal and is extensive. 

Supply caps, borrowing caps and other limitations will be enabled by governance members and administrators to reduce risks. Isolation mode will also be introduced, including debt ceilings to further improve risk management. 

The update will include a few other significant features, including support for Layer-2 networks that run on Ethereum. This would also reduce fees and transaction times by removing the need to move funds on Ethereum’s congested network, improving user experience and reliability.

A new cross-chain feature would also be introduced in Aave V3, allowing cryptocurrencies to be moved between Aave deployments on different networks, including Ethereum, Solana, Polygon and Fantom. 

According to Aave, the V3 update will create the “next-generation Layer-0 DeFi protocol."

Aave price gears up for take-off

Aave price has been trapped within a continuation pattern on the daily chart, as AAVE struggles to rally with multiple resistances weighing it down. 

Aave price is nearing the apex of the symmetrical triangle pattern, and a decisive break above $346.80 could see AAVE take off.

The 100-day and 200-day Simple Moving Averages (SMAs), which coincide with the upper boundary of the prevailing chart pattern at $346.80, continue to act as a stiff obstacle, not allowing Aave price to move higher. A slice above this level could witness the next AAVE rally.

AAVE/USDT daily chart

If Aave price continues to consolidate, AAVE will discover immediate support at the 21-day SMA at $318, then at the 50-day SMA that corresponds to the lower boundary of the triangle at $306.30. Further selling pressure could see the DeFi token drop toward the 23.6% Fibonacci retracement level at $286.80.