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Tether Enhances DeFi Through Aave Flash Loan Collaboration

Tether Becomes China’s Favorite Cryptocurrency as Spot Trading Rises

Tether stands as one of the largest blockchain networks out there that supports one of the most popular forms of stablecoins in the world. The Aave Protocol, in turn, is a non-custodial open-source protocol that has recently been given the task of increasing the global adoption of Tether (USDT) into the DeFi industry.

USDT Giving Impressive Yields

The USDT coin stands behind a range of DeFi lending projects as is, and Aave provides data that shows that the stablecoin itself offers the best returns for its lenders. According to the numbers Aave provides, lenders of USDT can get yields of up to 12% from their loans, an impressive performance for anyone.

When reviewed across the same period of time, Dai from MakerDAO, as well as the USDC from Circle, offers yields considerably lower. Dai only garnered 8%, while the USDC coin managed a meager 5.7%.

Global Innovations In DeFi

The growing trend of flash loans can further highlight the pivotal role that USDT serves within the DeFi industry. These flash loans allow a customer to borrow a range of tokens from the ERC20 family, without the need to post collateral to back the various loan positions. Instead, a loan must be returned within the same transaction.

Through the use of flash loans, users have been capable of leveraging the arbitrage opportunities that appear on-chain, as well as move open positions within DeFi Platforms and compete for on-chain liquidations.

Big Numbers Coming From USDT

Aave itself is a pioneer in the flash loan industry, and has found that the USDT coin is one of the most liquid stablecoins on the market. Thus, it serves as a powerful tool in this new innovation of lending that can only be possible on a blockchain network.

The total market capitalization for the USDT coin has more than doubled within a year. Last year’s $2 billion has now been replaced with a staggering $4.9 billion that it is today. Tether works on a range of various networks, including Ethereum, Algorand, EOS, Omni, Liquid Network, and the infamous TRON blockchain.

The CEO of Aave, Stani Kulechov, stated that the USDT coin stands as the largest stablecoin within the market. As such, Kulechov says that it brings forth a large amount of liquidity into the DeFi industry. With Aave on its side, Kulechove speculates that it will bootstrap the composability of Defi through the use of borrowing, lending, as well as flash loans.

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      A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.