Aave hits record $288 high as demand for flash loans and staking increases

Aave (AAVE) price has been on an absolute tear for weeks and today the DeFi-token rallied to a new all-time high at $288.90.

The decentralized finance protocol is one of the most popular in the market and the recent rally in the DeFi sector is one of the driving forces behind AAVE’s rally.

AAVE/USDT 4-hour chart. Source: TradingView

At the start of 2021, AAVE price was trading at $83 and the recent rally appears to have bolstered the protocol’s surging total value locked, increasing buy volume on spot and derivatives exchanges and the continued development of Aave’s lending platform and flash loan issuance.

TVL soars to a new high

Data from DeFi Pulse shows that Aave’s TVL rose from $2.03 billion on Jan. 1 and as (BTC) and Ether (ETH) price went parabolic Aave’s TVL also surged.

Total value locked on AAVE. Source: DeFi Pulse

Currently, Aave’s TVL sits at a new all-time high of $3.75 billion, making the platform the second-largest DeFi platform by TVL behind Maker (MKR).

The steady addition of new tokens to the lending and borrowing protocol increases the likelihood that its TVL will continue to rise and help AAVE retain its standing as one of the top DeFi projects in the cryptocurrency space.

Staking drives demand for AAVE token

AAVE’s trading volume also surged at the beginning of 2021, increasing from $200 million on Jan. 3 to a high of $928 million on Jan. 16.

AAVE price vs. Reported trading volume. Source: TheTIE

As AAVE price reached a new high, it’s 24-hour trading volume notched a record $1.06 billion. This volume surge is partially driven by investors acquiring more tokens for staking, with 26.8% of the total supply of AAVE currently staked on the platform earning an APY of 6.1%

Flash loans attract investors

Another reason for AAVE’s recent surge is the growth of its flash loans.

Flash loans allow cryptocurrency holders to collatoralize their portfolio to fund other purchases or new crypto purchases. The loans also help investors utilize the…

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