Aave handed over the governance keys to the DeFi community finally and now they have control over the project’s future so let’s read more in today’s cryptocurrency latest news.
Aave announced the final handoff of admin control of the protocol to the community of the token holders. It was testing the decentralized governance model since July to ensure a smooth rollout as the founder Stani Kulechov and the rest of the developers still remain to build new functions based on the community needs. The platform became the latest in series of DeFi protocols to relinquish the control of the governance of the protocol by trasnfering the power from the original developers to the community to steer the ship.
Aave handed over the admin keys of the governance contracts which are now controlled by the AAVE token holders thus allowing decentralized governance votes to have direct control over the protocol changes. The handover follows months of testing to make sure that the governance decisions will translate smoothly to changes on-chain during which time the developers acted as an intermediary between the community votes and the on-chain action. The governance tokens were initially distributed in November during a 2017 token sale which raised $18 million for development of the protocol.
The move shows how more and more of the apps are getting serious about the decentralized governance and the ethos of decentralized networks to life at application level. Defi uses automated blocks of code known as a smart contract to execute financial functions like issuing loans or offering the interest on user deposits. Defi applications like Aave run on decentralized networks like Ethereum where no single entity can turn off or even censor the blockchain data.
Decentralized governance is another extension of the paradigm so instead of being ruled by a centralized developer team, the apps will now get decentralized governance which will allow protocol users to vote on future changes and the direction of the protocol, as Stani Kulechov said:
“Giving up the admin keys to the Aave tokenholder governance is a historically remarkable event. Aave is more decentralized than ever. The key handover should also incentivise more developers to contribute to the Aave protocol codebase, creating grant mechanisms and driving the protocol towards self-sustainability. The Aave founding team will be one of the core developers of the protocol in the future and will build what the community wants.”
Aave revealed its plans for decentralized governance back in July by outlining the mechanisms for rewarding contributors and providing more security against losses if the value of the crypto backing loans crash. The overall value of the tokens placed into lending protocols increased to $1.7 billion and now has more than $950 million locked as of today.
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