One of the year’s most profitable decentralized finance tokens, LEND, is not just about the hype.
The 24th-largest cryptocurrency gained more value in the first two days of this week, as its price surged by more than 40 percent. As of Tuesday, the LEND/USD exchange rate was trading at $0.786, its highest level to this date.
LEND price is now sitting atop 3,900 percent YTD profits. Source: TradingView.com
LEND Demand Grows
The latest move upside followed four consecutive weekly sessions in green, representing traders’ growing exposure in LEND.
The demand itself originated from this year’s boom in the decentralized finance industry. LEND, the governance token of Aave – a protocol that enables users to earn interest on deposits and borrow assets with a variable or stable interest rate, surged on the same hype.
That was also reflecting in the total value locked in Aave reserves. As of today, the protocol’s smart contract had about $1.5 billion worth of assets. It showed that more traders/investors used Aave to lend LEND tokens to earn attractive interest rates.
Total value locked inside Aave smart contracts. Source: DeFi Pulse
But the token’s gains this week originated from Aave Limited, Aave’s UK business entity, which earned itself an Electronic Money Institution license in July. The authorization enabled the grantee to offer services that include digital asset issuance and payments.
The news signaled mainstream approval for Aave as a DeFi project. It also paved the way for institutions to get into a rather unexplored space of distributed lending and borrowing. Especially in times when investors are earning a much lesser interest rate by keeping their capital with banks.
The FCA-approval validated the Aave protocol as a contender in the lending space.
Michaël van de Poppe, a prominent market analyst, braved Aave and its investors for their patience, recalling days when the market had rubbished the DeFi project as dead.
“In the accumulation zone; everybody calls the coin dead,” he said. “But now, everybody wants to have it. Literally, how the market psychology works – and I believe a substantial amount of coins will follow LEND.”
Other market analysts, including Three Arrow Capital’s CEO Su Zhu and Nugget News founder Alex Saunders, envisioned LEND to grow higher. Mr. Zhu tweeted cryptically that it is now “time to onboard millions into DeFi,” never indicating whether it for LEND or the entire DeFi sector.
Mr. Saunders, on the other hand, expected the Aave token to surge by 1000x.