Aave V3

• Since its launch in 2020, Aave has been a leader in innovation in the DeFi ecosystem. However, the protocol wasn’t immune to the woes of operating in a multi-chain environment and has been impacted by the congestion and high latency Ethereum has long suffered from.
• But, all of this has come to an end with the launch of Aave’s latest version, which set out to solve not just the technical limitations the protocol faced, but the problems users experienced as well.
• Aave’s V3 set out to improve four key areas: capital efficiency, protocol safety, decentralization, and user experience. Aave’s development team saw these areas as ripe for improvement and has devoted months to overhauling the protocol.[1]

Multi-chain portal function

With the portal function, assets within Aave V3 can easily flow between different chains. In addition, the upgraded Aave V3 can mint “aTokens” on the target chain, destroy them on the source chain, maintain the consistency of accounting between different chains, and then provide the underlying assets to the target in a rollover manner Aave on the chain finally flows into the pool after passing through the chain bridge. [2]

Multiple Rewards and Claims

In Aave V2, Aave governance activates liquidity mining rewards through community proposals, and rewards are ultimately settled in stkAave tokens despite the different rates for each asset. Aave V3 now offers users multiple reward options to leverage their protocol tokens to provide additional incentive rewards. Additionally, V3 allows users to claim rewards to another account and claim multiple types of asset rewards in one transaction, saving Aave users time and money. [2]

Methodology

• We find all the contracts for AAVE and separate them out into V2 and V3

  where project_name = 'aave' 
    and (
    	address_name ilike '%v2%'
    	or address_name ilike '%v3%'
    )
  

• Once we have these contract, we then look at transactions for each of the contract On Ethereum for V2 and Polygon on V3.

• We look at fee generated as for AAVE version as well as granularity on the per contract level.

Compare the premium fees earned in AAVE v2 and AAVE v3 in the last 90 days. Which one is the leading fees generator?

• Given on the right is the Weekly Fee in $ETH over time for the past 90 days.
• Fee before June 13, was very minimal for V2 only one week saw a sizeable fee collected on May 9, 2022, around 5K
• Once V3 came into the picture, we saw a huge spike in fee and a consistent fee collected around 2-4K $ETH every week.
• In the past 90 days, V2 has collected 11.7K $ETH in fees, whereas V3 has collected 30K $ETH in fees.
  • Most of this fee has come from the aave v3 pool contract with 8.5K $ETH or 20.5% of the total fee till date.
  • Followed by v2 lending pool collecting 3.4 $ETH in fees till date.

Has Aave v3 eaten Aave v2's premium fee share?

• Yes, with AAVE v3 improvements it being built on L2 with lower fees, we see a lot more users interacting with AAVE V3 as compared to V2.
• It is evident from the data in the past 90 days V3 has really eaten V2’s fee.