The host of popular crypto market commentary show Coin Bureau says that several decentralized finance (DeFi) altcoins are making a comeback.
Speaking in a recent YouTube update, Coin Bureau’s host “Guy” says that DeFi is making a comeback despite most predicting that crypto has entered a bear market.
The show’s host noted that non-custodial liquidity protocol Aave ($AAVE) has been rallying as of late due to the project’s launch of a new decentralized stablecoin.
As reported by The Daily HODL, Guy said,
2/ GHO will be:
💪 Over-collateralized by assets that continue to earn yield
✨ Backed by multiple types of collateral available on the Aave Protocol
⚖️ Governed by the Aave community
With community support, GHO can extend the capabilities of the Aave ecosystem!
— Aave (@AaveAave) July 7, 2022
However, he believes that the dollar-pegged decentralized algorithmic stablecoin $GHO, which was proposed by Aave Companies on July 7, should increase demand for $AAVE:
“What does [matter] is the relative lack of demand drivers for the AAVE token. The AAVE token’s utility is currently limited to governance and staking, which offers an admittedly attractive reward relative to alternatives, albeit with slightly higher risks.
“The silver lining is that most of Aave’s supply is in circulation, meaning there isn’t much sell pressure left and this seems to be the rationale behind allocating the interest rates from the GHO stablecoin to the Aave treasury. It reduces the sell pressure for the AAVE token and ensures the protocol’s longevity.
“The introduction of the GHO stablecoin should also increase the demand for AAVE since it will make it possible for Aave stakers to mint GHO at near-zero interest rates. The caveat is that an increase in staked Aave could dilute the overall staking reward, which could weaken Aave’s second demand driver.“
As for where the $AAVE price is headed, he had this to say:
“The harsh reality is that Aave’s future improvements to demand won’t do much to change the fact that we’re currently in a crypto bear market, but it will help the Aave token rise to astronomical heights when the next bull market comes around, especially if the GHO stablecoin gains serious adoption.“
Featured Image by Sergei Tokmakov Terms.Law from Pixabay