Aave Protocol (AAVE), one of the most advanced DeFi ecosystems so far, has released its AMM Market that allows for seamless integration of LP tokens from other protocols. Balancer (BAL) and Uniswap (UNI) are the pioneers of the new instrument.
"The Multi-Market Approach": Exploring new frontiers
According to the official announcement by Aave's Marc Zeller, the protocol launched AMM Market. This model allows users to collateralize liquidity provider tokens of various protocols. The first release empowers LP assets of Uniswap (UNI) and Balancer (BAL) with this functionality.
Liquidity provider tokens ("LP tokens") represent a sort of reward for providing liquidity to DeFi ecosystems. Thus, "yield farmers" from Balancer (BAL) and Uniswap (UNI) can benefit on Aave Protocol (AAVE) with rewards from their "native" protocols.
Namely, Aave Protocol (AAVE) now allows the collateralization of 14 Uniswap LP tokens, including DAI/USDC, DAI/WETH, WBTC/USDC and others, as well as Balancer's WBTC/WETH and BAL/WETH tokens.
While collateralizing these assets, Aave Protocol (AAVE) users can borrow DAI, USDC, ETH, wBTC, USDT and AMM's LP tokens.
More protocols to come
To ensure accurate pricing, the new system harnesses the power of Chainlink's (LINK) decentralized oracle infrastructure. Smart contracts for this purpose underwent a technical audit by ConsenSys Diligence.
The Aave Protocol (AAVE) team is sure that many more protocols will be integrated into Aave's AMM Market. The final decision on this type of integration will be up to the AAVE holders ("AAVE Governance"):
In DeFi there are no Aave users and there are no AMMs users. There are only DeFi users.
As a result, all proposals to allow the collateralization of new assets should be submitted to the governance forum with the assistance of community representatives.
Dan Burgin
Vladislav Sopov
