Aave – the decentralized liquidity protocol- has just enabled its users to deposit and borrow assets from the Aave AMM Liquidity Pool. At first, the only LP tokens that will be accepted as collateral will be those from Uniswap and Balancer.
Today, users can begin depositing and borrowing crypto assets from the Aave AMM Liquidity Pool, enabling @Uniswap and @BalancerLabs liquidity providers to use their LP tokens as collateral in Aave Protocol 👀https://t.co/Gf0WZ6fWiy
— Aave (@AaveAave) March 16, 2021
As a quick refresher, automated market makers (AMM) like Uniswap and Balancer enable anyone to become a liquidity provider and earn a proportional share of the swap fees paid to the pool. Liquidity providers receive LP tokens in return for their provided liquidity, these tokens accrue trading fees over time based on the trading volume of the specified AMM pool.
The Aave AMM Market was first established last year using Uniswap V1 LP tokens as a live test case. Since there has been a ton of community demand for this functionality, the following Uniswap LP tokens will be whitelisted on the Aave AMM Market starting today:
Additionally, there will also be 2 Balancer LP pairs that are also whitelisted, WBTC/WETH and
Depositors of the listed LP tokens will be able to borrow DAI, USDC, ETH, wBTC, and USDT using Aave. Chainlink oracles will be utilized to determine the accurate value of the LP tokens and the smart contracts involved with the new AMM market have been audited by ConsenSys Diligence.
Keep up with Aave by following them on Twitter.