Decentralized lending protocol Aave announced yesterday the launch of its AMM (Automated Market Maker) market, enabling LP tokens from two major AMM platforms to be used as loan collateral.
The AMM market operates with liquidity independent from Aave V1 and V2 lending markets. This means collateral in the AMM market cannot be used to borrow assets from Aave V2. Currently, the AMM market holds approximately $5.34 million in total collateral assets.
Supported LP Tokens and Platforms
According to Aave's official release, the AMM market initially supports select LP tokens from Uniswap and Balancer. Here’s the breakdown:
| Platform | Supported LP Tokens |
|---|---|
| Uniswap | ETH/DAI, ETH/USDC, ETH/USDT |
| Balancer | BAL/ETH, wBTC/ETH |
Key Features
- Valuation: LP token values are fetched via Chainlink’s decentralized Oracle.
- Audits: Smart contracts audited by ConsenSys Diligence.
- Borrowable Assets: Initially limited to DAI, USDC, ETH, wBTC, and USDT due to their price stability.
👉 Discover how Aave’s AMM market transforms DeFi liquidity
Unresolved Aspects
- Mining Rewards: No clear handling for LP token rewards (e.g., Balancer’s weekly BAL distributions).
- Safety Module: Not supported in Phase 1; community votes may integrate it later.
Roadmap and Governance
Post-launch, the AMM market will transition to community governance, allowing votes on:
- Adding new AMM platforms/LP tokens.
- Including AMM pools in the Safety Module.
FAQs
Q: Can I use AMM market collateral to borrow from Aave V2?
A: No, the AMM market’s liquidity is isolated from Aave V2.
Q: Which cryptocurrencies can I borrow initially?
A: DAI, USDC, ETH, wBTC, and USDT.
Q: How are LP token values determined?
A: Via Chainlink’s decentralized Oracle network.
Q: Will Balancer’s BAL rewards be claimable?
A: Currently unspecified by Aave.
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