Yield & Collateral swap Flash Loans Upgraded Repayment with collateral Flash liquidations

What’s new with V2?

In DeFi, assets that were being used as collateral were tied up, but now with V2 they are free to be traded. Users can trade their deposited assets, across all currencies supported in the Aave Protocol, even when they are being used as collateral.

Flash Loans were the first undercollateralised loan option to shake up the DeFi space, resulting in the creation of many innovative tools and “money legos”. Flash Loans continued to inspire ideas to make new features possible in Aave V2.

Before V2, if a user wanted to use part of their collateral to repay a loan, they had to first withdraw the collateral, use it to buy the borrowed asset, and then finally repay the debt and unlock the deposited collateral. This new feature allows users to close their loan positions by paying directly with their collateral in just 1 transaction — smooth and simple.

Previously, a liquidator needed to have capital in their own wallet or source it from somewhere else in order to liquidate a position and get that liquidation bonus. With Aave V2, liquidators can utilise Flash Loans to flash borrow the capital from the Aave Protocol itself in order to execute a liquidation.

And much more! For a more detailed description of changes please visit our medium page.