Investing in Aave (AAVE) – Everything You Need To Know

Aave is a decentralized lending system that has helped take interests in the DeFi sector to a new level. This next generation protocol was one of the first to allow users to borrow, borrow, and earn interest on crypto assets. Best of all, you don’t need a middleman when using Aave as the whole system runs autonomously through smart contracts that run on the Ethereum blockchain.

Since its inception, Aave’s developers have taken great care to make their network accessible to all. The open access and ease of use of this platform make it ideal for institutional and retail investors. As a result, Aave has become one of the most popular DeFi apps in the world.

What problems does Aave solve?

Aave seeks to solve some of the most pressing problems traditional lending services face. As with all DeFi, the main goal of the project is to move centralized financial services to their decentralized equivalents. In a normal lending scenario, banks would borrow your funds and earn interest. Even though they borrow your money, you never get access to that profitable interest income.

Aave homepage

Everything is changing in the Aave ecosystem. Anyone can lend their crypto to other users in a trustworthy manner and without permission. The interest you get from borrowing your assets is paid directly to your network wallet. In this way, Aave has helped revolutionize the peer-to-peer lending field and spawn an entire DeFi sector with the same goals.

Benefits of Aave

There are many benefits to using this decentralized financial protocol. On the one hand, you get transparency about the lending processes and activities of the entire network. Traditional lending services operate in camera, leaving you in the dark with your funding about activities. With Aave, everything is on the blockchain for the entire community to see.

Open source

In keeping with the openness of the DeFi sector, Aave has made its loan protocols open source. Open source coding is generally safer because it is subject to extensive community review. Experienced investors prefer open source projects to private ones, as they can ensure all activities and functions. This way there are no hidden risks or fees.

Protocol without custody

Aave is a non-custody platform which means your cryptocurrency is never stored directly. Unsecured platforms provide more security as you retain ownership of your assets. You also have less risk of becoming a target for hackers as there are no wallets filled with users’ funds to hack.

Control without ownership

One of the best things about Aave is that the protocol allows a borrower to expose themselves to various cryptocurrencies without actually owning them. With Aave, you can earn rewards without trading your favorite digital assets. This strategy reduces the risk of loss.

Aave - Twitter

Aave – Twitter

Pricing options

Aave users enjoy a nice variety of interest rate options. The system offers both stable and floating interest rates to meet your investment goals. The best thing is that you can switch between these fee structures at any time.

Private

Many users are pleased to note that Aave’s decentralized nature makes it ideal for privacy-conscious investors. When using this next generation credit protocol, there is no middleman involved. In particular, you don’t have to waste time filling out lengthy Know Your Customer (KYC) or Anti-Money Laundering (AML) documents.

selection

Aave users have an excellent selection of credit pools available. The network currently supports 17 different assets. In particular, Dai Stablecoin (DAI), USD Coin (USDC), True USD (TUSD), Tether (USDT), Synthetix USD (sUSD), Binance USD (BUSD), Ethereum (ETH), ETHlend (LEND), Basic Attention Token (BVT), Kyber Network (KNC), Chainlink (LINK), Decentraland (MANA), Maker (MKR), Augur (REP), Synthetix Network (SNX), Wrapped Bitcoin (wBTC) and 0x (ZRX).

How does Aave work?

Aave is an Ethereum-based P2P lending system that is bringing some new features to the market. To accomplish this task, Aave’s developers put in place a unique strategy that relies on secured loans and pools of loans to provide a seamless experience.

Aave tweets

Aave tweets

To take advantage of Aave, lenders must deposit funds into the network’s liquidity pools. Borrowers can access these funds and borrow at will. In order to borrow funds from the liquidity pool, users must lock in an amount of collateral that is greater than the amount being withdrawn. In particular, the value of this collateral is based on USD.

If the collateral falls below the required collateral threshold, the system automatically makes it available for liquidation. Other users can then purchase these funds at a discounted price. This strategy ensures that the liquidity pools always remain positive.

Reserves

Aave was also one of the first P2P lending systems to introduce reserve funds for liquidity pools. These funds will be used to help the pools fight market volatility. In addition, the reserves serve as insurance for lenders whose funds are available should they wish to remove them from the liquidity pools.

oracle

Interestingly, Aave leverages the power of another popular crypto platform, Chainlink (LINK), to determine the real-time value of secured assets. Chainlink is a decentralized network of oracles. Oracles are off-chain sensors that can communicate with the blockchain. Chainlink’s decentralized approach to oracles helps keep these sensors accurate.

Flash Loans

Aave changed the game when they launched Flash Loans. These open source protocols allow users to get quick loans with no collateral. In addition, flash loans must be repaid until the next Ethereum block is dismantled. These quick loan lighting protocols enable users to complete many tasks in a short amount of time.

Primarily, flash loans are used for arbitrage trading opportunities. You can take out a loan on a token and trade it on another platform with the listed asset at a higher price. You can also use flash loans to refinance loans for other loan protocols or swap collateral. There is a 0.3% charge for this service. In particular, this protocol has become one of the core components of most of the revenue systems in use today.

Interest rate change

Users are also given the option to change their interest structure. With Aave you can choose between stable and variable rates at any time. The variable interest rates change continuously based on the demand in the liquidity pool. In comparison, stable interest rates are based on an average interest rate for an asset over the past 30 days.

Aave (AAVE)

AAVE is the original utility token for the network. This ERC-20 token was launched under a different name in November 2017. In particular, this token was carried over from the time Aave was ETHLand. AAVE is a deflationary asset that is listed on dozen of stock exchanges today, notably Binance. Developers have announced their intention to make AAVE the primary governance token for the network soon.

aTokens

When you deposit Aave you will receive aTokens. You will receive the equivalent of aTokens compared to your deposit. These tokens are vital to the network as they can be used to earn interest in your lending activities.

aTokens

aTokens

Story of Aave

Aave was launched in 2017. The platform was the first DeFi credit protocol and had a completely different name: ETHlend. Company founder Stani Kulechov has taken great care to remove technical barriers so that everyone can take advantage of this advanced network. Notably, the Aave raised over $ 16 million during its crowdsale.

How to buy Aave (AAVE)

It’s easy to get your hands on AAVE these days. You can get this token directly from the network at any time. Many reputable exchanges support this token. Binance, the world’s largest cryptocurrency exchange by market capitalization, offers AAVE to its users.

You can buy AAVE from Binance or Kraken.

How to Save Aave

Saving AAVE is just as easy. You can keep this token in any ERC-20 compatible wallet such as MyEtherWallet (MEW) and MyCrypto. Serious investors will be pleased to learn that some hardware wallet options are also available. The Ledger Nano S or the Ledger Nano X both support this DeFi token.

Aae – a pioneer in the market

Aave has proven to be a driving force behind innovation in the crypto sector. This network was way ahead of the DeFi curve. As such, it is now one of the biggest players in the industry. Users enjoy a simplified and secure DeFi experience when using Aave. For these reasons, you can expect to hear a lot more from this resourceful network in the coming weeks.

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