AAVE, one of the markets leading lending protocols, brings further offerings to its value proposition. In a recently released announcement, the protocol revealed that they have now enabled Uniswap and Balancer LP tokens to be collateralized on the platform.
AAVE currently holds over $5 billion in total value locked, according to data from DeFi Pulse, and it ranks third in terms of this metric, trailing behind Maker and Compound.
In a recent announcement, however, the protocol has taken steps to expand that, targeting one of the hottest segments of the DeFi market – automated market makers and, in particular, Balancer and Uniswap.
According to the release, “the new AMM Liquidity Pool enables liquidity providers of Uniswap and Balancer to use their LP tokens as collateral in the Aave Protocol.”
In other words, LPs no longer have to have their tokens sleep. Instead, they can borrow against them and put that capital to work.
At launch, the platform will support 14 Uniswap V2 LP tokens and 2 Balancer LP tokens.
Presently, those who deposit LP tokens are able to borrow the following cryptocurrencies: DAI, USDC, ETH, wBTC, and USDT.
Additionally, users who deposit DAI, USDC, ETH, and wBTC, may also borrow AMM LP tokens, adding yet another capability.
In order to estimate the value of the LP tokens from Uniswap and Balancer accurately, AAVE leverages Chainlinks oracles.
CryptoPotato reached out to Stani Kolechov, the CEO and founder of AAVE, who said:
Aave is on a multi-market journey. Now you can use your Uniswap and Balancer LPs as collateral, soon to be followed by Sushiswap and Curve LPs. Over 16 LPs available from today.
The community can make proposals for new collaterals and AMM protocols on the governance forum.