Aave users can now move their loans from the previous marketplace Aave 1 (V1) to its recently launched new marketplace, Aave 2 (V2).
The Ethereum-based lending platform has made its migration tool available for users to move their loans onto the new marketplace launched in December.
The tool, which is available on the V1 dashboard, is powered by flash loans. These are uncollateralised loans that allow for the borrowing of an asset, as long as the borrowed amount and a fee can be returned before the end of the transaction.
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In a single transaction the migration tool will take liquidity from Aave V2, use it to pay back lenders’ loans in V1, migrate investors’ V1 collateral to V2, open up equivalent positions in V2 and bring back the liquidity to V2.
This complex transaction is done on autopilot and investors only have to select the parts they want to move onto the new marketplace and click ‘migrate’.
V2 allows Aave lenders to trade their deposited assets across all currencies supported in the marketplace, even when they are being used as collateral.
Aave has previously said that this collateral swapping can be a useful tool to avoid liquidations.
“The Aave Protocol V2 is the future of Aave and already $820m (£597.2m) of liquidity adopted the upgraded version of Aave, but feel free to migrate to V2 at your own pace!” Aave said in a blog on its website.