Aave Integrates METIS as Collateral: What It Means for Users

Aave, the leading lending and borrowing protocol in decentralized finance (DeFi), is set to enhance its offerings by integrating METIS as collateral on the Metis Layer 2 (L2) network. This development aims to broaden the utility of METIS tokens and improve capital efficiency for Aave users. Here’s a closer look at what this integration means for the DeFi community.

Enhanced Capital Efficiency with METIS Collateral

With METIS now supported as collateral on Aave, users on the Metis network will be able to collateralize their METIS tokens to access borrowing opportunities. Specifically, the platform will offer a 30% loan-to-value (LTV) ratio, allowing users to borrow assets up to 30% against their total METIS collateral. For example, if a user supplies 100 USD in METIS value as collateral, users can borrow up to 30 USD (30%) of that value in other assets available on Aave.

Benefits for DeFi Users

1. Increased Borrowing Power: The 30% LTV ratio means users can unlock liquidity without having to sell their METIS tokens. This enhanced borrowing power provides greater flexibility in managing investments and capital.
2. Improved Liquidity Management: By using METIS tokens as collateral, users can access additional financial tools and liquidity within the Aave ecosystem. This is particularly beneficial for users looking to optimize their asset management strategies.
3. Cost Efficiency: Transactions on the Metis network are faster and less expensive than those on the Ethereum mainnet with speeds and transaction costs that rival the best in the industry. This cost efficiency makes the borrowing and lending processes more accessible and economical.

Available Assets

Leveraging METIS as collateral, users will initially be able to borrow any of the following assets:

• USDT
• USDC

Timeline for Integration

The Metis and Aave teams worked closely together to make this feature live today. You can now collateralize your METIS and access borrowing here.

Conclusion

Integrating METIS as collateral on Aave represents a significant step in enhancing DeFi capabilities on the Metis L2 network and on the Aave platform. With improved capital efficiency and access to various financial instruments, users can look forward to new opportunities for managing their digital assets. 

Stay tuned for further updates and be ready to take advantage of these developments in our DeFi ecosystem.

Example:

Borrowing Power=Value of METIS × LTV Ratio

Where:

• Value of METIS = Number of METIS tokens × Price per METIS
• LTV Ratio = 0.30 (for 30%)

So, if you have 100 METIS at $10 each, the calculation would be:

Borrowing Power=(100 METIS×10 USD/METIS)×0.30

Summary: If you have 100 METIS with a value of $10 each, you can borrow up to $300 in other assets on Aave.