Aave Releases AMM Liquidity Pool, Uniswap and Balancer LPs Can Use their LP Tokens as Collateral in Protocol
Popular decentralized finance (DeFi) application, Aave Protocol, which allows users to unlock liquidity across various assets, has launched a new AMM Liquidity Pool.
This latest launch will enable the liquidity providers of popular DEXs Uniswap and Balancer to use their LP tokens as collateral in the Aave.
“Automated Market Makers” (AMMs) are all the rage in the market as they allow Ethereum users to swap assets without a third-party intermediary. While providing this liquidity, they earn fees as well.
On providing liquidity, users get LP tokens from the AMM, which in most cases represent the crypto deposited by the user along with proportional trading fees. These LP tokens accrue trading fees over the time the assets remain in the liquidity pool.
“AMMs were one of the first ways to earn a passive income in the DeFi ecosystem and remain so today,” notes Aave.
While Aave launched an “AMM Liquidity Pool” last year, it only allowed users to deposit Uniswap v1 LP tokens in the Aave Protocol and use them as collateral.
But now, users can use LP tokens from several AMMs, starting with Uniswap and Balancer.
DAI/USDC, WBTC/USDC, DAI/WETH, USDC/WETH, AAVE/WETH, LINK/WETH, BAT/WETH, SNX/WETH, UNI/WETH, YFI/WETH, CRV/WETH, MKR/WETH, REN/WETH, and WBTC/WETH are supported Uniswap V2 LP tokens.
As for Balancer LP tokens (BPT), WBTC/WETH and BAL/WETH are supported.
This launch will allow the community to explore “new frontiers” with Aave. The DeFi blue-chip is currently enjoying an uptrend of 300% YTD, trading at $365.