The lending platform AAVE has been enjoying positive news lately. According to reports, AAVE has passed a governance proposal that would eradicate all bad debt it accumulated when Avraham Eisenberg, orchestrator of the Mango Markets exploit, targeted the platform’s Ethereum V2 liquidity pool back in November 2022.
However, the governance token of the platform, AAVE, has not responded either positively or negatively. According to data from CoinGecko, the token registered losses in the daily and weekly time frames. But these losses are too miniscule to revert the token’s gains from the start of the year.
With the launch of AAVE’s V3 on its mainnet, the crypto might be in a position to tally new highs if the situation permits it.
Image: Coinpedia
The Gist Of The Proposal & On-Chain Developments
Based on the proposal, the token has over 2,677,749 units of CRV in debt on its Ethereum V2 CRV reserve. This is worth, at the date of the proposal, over $2.5 million. The proposal would use V2’s stablecoin reserve to buy the necessary number of units of CRV to pay the debt.
This obviously was accepted by the community positively, being implemented immediately by January 25th. This would reverse the damage of the exploit attempt, proving the liquidity of the protocol.
The deployment of AAVE’s V3 on Ethereum was also implemented. According to DefiLlama, the crypto is in the top 4 among all platforms. AAVE V3, the Ethereum pool deployment, has over $526.52 million total value locked.
Image: DefiLlama
At $86.02, What’s In Store For AAVE?
The token is currently consolidating around the $85.8 support range. This could be a sign that the token still has room to regain lost ground from 2022’s bear market. However, this can only be achieved if the token closes with a green candle to continue AAVE’s rally when the year started.
Investors and traders should target the token’s current resistance at $90.15. If the bulls can consolidate at the token’s present support, we can see an upward push towards $94.70.
AAVE total market cap at $1.2 billion on the daily chart | Chart: TradingView.com
Investors should also monitor the token’s correlation with Bitcoin and Ethereum as these would have a big influence on its price movement in the short to medium term.
As these major cryptocurrencies retest their crucial resistances, a breakthrough by either one or both of these coins would boost AAVE’s momentum to regain lost ground.
With this in mind, investors and traders should exercise caution in the short to medium term as the token can still be clawed by the bears to revert back to $78.65.
Featured image by Kanalcoin.com