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The popular decentralized finance (DeFi) lending protocol AAVE has implemented a huge update since it launched its version two (V2). The new update includes many new protocol changes that will make the protocol much better than the first version.
Main features in the Aave version 2 update
Several key features are incorporated into the version two update of the loan protocol. The protocol’s larger user base will now find the protocol much simpler and cheaper to use. All key protocol services can now be used easily in the latest updated version. This move was taken in an effort to make the lending process against volatile digital assets less risky.
The new features will make this decentralized money market protocol more capital efficient and more flexible. In the second version, the new collateral swap functionality has been added. Collateral exchange allows users to trade secured assets for any asset supported by the AAVE protocol. These resources can then be used by protocol users to earn yield. In addition, the collateral swap was fueled by the new and improved flash loan system.
Speaking of the new updates added in the updated version, the company said in a blog post:
“The exchange of collateral can be a useful tool to avoid liquidations. If the price of your guarantee starts to go down, for example, you can simply exchange it for a stablecoin so you don’t have to worry about price fluctuations and potential liquidation.“
Commenting on the collateral exchange, Aave Protocol Chief Executive Officer (CEO) Stani Kulechov said in a video on Zoom that users would now be able to trade their collateral from Chainlink’s LINK to the native AAVE protocol digital token and then from Ethereum (ETH) to the YFI governance token.
