This weekend the decentralized money market protocol Aave broke records as the community witnessed a massive flash loan of $14 million worth of the stablecoin DAI. So far, the Aave protocol has seen over $300 million in flash loans to-date and this trend doesn’t seem to be abating any time soon.
In just a short period of time, the Aave protocol (the Finnish word for “ghost”) has seen enormous demand. Essentially, Aave is a decentralized finance (defi) protocol that currently has 19 supported tokens including ethereum (ETH).
To-date the total-value locked (TVL) is around $1.5 billion at the time of publication. Aave allows for unique lending and borrowing experiences like flash loans, credit default swaps, and credit delegation.
Flash loans are a unique concept that allows the user to borrow funds without the need for collateral.
“Flash Loans are the first uncollateralized loan option in defi,” the Aave website explains. “Designed for developers, Flash Loans enable you to borrow instantly and easily, no collateral needed provided that the liquidity is returned to the pool within one transaction block.”
On August 29, a user executed Aave’s largest flash loan of $14 million worth of DAI and so far Aave has seen $300 million in flash loans. More than half of the aggregate of flash loans settled were executed during the month of August.
Data from the web portal Aavewatch shows that flash loans executed from July 30 to September 1 saw an increase of 117%. The month prior defi flash loans using Aave increased by 809%.
Despite the Aave website explaining that flash loans are for developers, a number of people without programming abilities are leveraging these types of uncollateralized loan options.
Today there’s a couple of online tools that create defi composability. This means any user can leverage a number of defi apps in a lego-like fashion and execute…