Aave token rallies over 46%, outshining BTC and ETH in market gains

The Aave token took off on a 46% rally over the last four weeks, driving its price from $94.41 to $139. This price surge surpasses the performance of other top 100 cryptos by market value, including Bitcoin (BTC) and Ethereum (ETH).

On-chain data shows that AAVE’s open interest (OI) data and daily active addresses are rising, signaling the continuation of its bullish trend. AAVE’s OI increased from $106.24 million on Monday to $191.16 million on Thursday, the highest OI since the start of this year.

Currently, AAVE’s open interest is at $173.05 million,

Aave token outperforms other cryptocurrencies due to new proposals

Investor bias for the Aave token began in late July, following Aave-Chan Initiative founder Marc Zeller’s proposal to allocate a share of the platform’s net earnings to key ecosystem participants and a fee adjustment for repurchasing AAVE from the secondary market. 

Another proposal that pushed the investor rally for AAVE was the ‘Umbrella’ Initiative, which called for the shift from the ’seize and sell’ liquidation mechanism to ‘seize and burn.’ According to Katie Talati, head of research at Arca, this new ‘umbrella’ project would help alleviate market pressures on selling AAVE and help manage risky loans. 

She added that the primary purpose of the new initiative would be to utilize a range of assets to settle outstanding debts. For instance, these assets would be used when a position is liquidated, and the collateral does not cover the liquidation, rather than just using the AAVE.

Aave team tokenomics update sparks rally 

Web3 agency Deelabs remarked on the new proposals on X, stating that buybacks would result in positive market pressure. The company added that the Umbrella offering would reduce the adverse effects on AAVE price during loan liquidations. 

Wintermute, the algorithmic trading firm, also said the proposals aimed to revamp AAVE’s tokenomics and risk management. It also mentioned how the update played a significant part in rallying investors to AAVE.

These two proposals contributed to stoking investors’ enthusiasm as AAVE price subsequently rose by 46%. Over the same period, Helium’s HNT was the closest rival with a 26% price gain. AAVE also generated over $27 million in fees, outshining other lending and borrowing protocols.