Aave is a decentralized lending system that allows users to lend, borrow and earn interest on crypto assets, all without middlemen.
What is Aave?
- Aave is a system of smart contracts that enables these assets to be managed by a distributed network of computers running its software.
- The Aave software enables the creation of lending pools that enable users to lend or borrow 17 different cryptocurrencies including ETH, BAT and MANA.
- AAVE provides holders with discounted fees on the platform, and it also serves as a governance token — giving owners a say in the future development of the protocol.
- Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a flash loan using this liquidity.
- Aave was originally known as ETHLend when it launched in November 2017, but the rebranding to Aave happened in September 2018.
- Aave’s open-source protocol is built on Ethereum, a blockchain that is currently making the transition from Proof-of-Work to Proof-of-Stake.
|Total Token Supply||16,000,000|
|Current Circulating Supply||See Coinmarketcap|
|Market Capitalisation||See Coinmarketcap|
|Token Creation Date||November 2017|
|Can it be mined?||Yes|
Who is behind Aave?
Aave was founded by Stani Kulechov, a former law student at the University of Helsinki . He found some flaws on Ethereum such as, the lack of lending applications and wanted to explore how he could impact the traditional financial system.
What is the purpose of Aave?
Aave was designed to be an open source, decentralized finance, and non-custodial liquidity market protocol to earn interest on deposits and borrow assets. It provides holders with discounted fees on the platform, and it also serves as a governance token.
- Users can switch between stable or variable interest rates. This ensures they can get the best rate for the loan. Algorithms determine the rate based on demand for an asset pool.
- Flash Loans are the first uncollateralized loan option in DeFi. Designed for developers, Flash Loans enable you to borrow instantly and easily, no collateral is needed provided that the liquidity is returned to the pool within one transaction block.
- Aave adds the ability for users to take out borrowed positions on fee-collecting tokens like Uniswap LP tokens and TokenSets. Users could take out a loan against a position that is earning them revenue – without having to sacrifice the opportunity cost of being unable to enter those positions in order to take advantage of crypto lending and borrowing.
- Aave Protocol has integrated with Chainlink to power the Aave oracle network. By leveraging Chainlink oracles, Aave Protocol’s prices reflect real-time conditions on and off chain. Chainlink guarantees a decentralized oracle service that cannot be exploited at a single point.
- Aave has several unique selling points when compared with competitors in an increasingly crowded market. During the DeFi craze in the summer of 2020, it was one of the biggest projects in terms of the total value of crypto locked in its protocol.
- Aave protocol might not be an attractive option for investors because of its low interest provided by its pools, especially those who implement yield farming or liquidity mining.
- Flash loans can be a powerful tool with multiple functions, but at the same time, a high-level threat to these protocols. AAVE is one of the first protocols to implement these functions, and although at the moment accessing them is tedious, this window is still open to unknown security problems.
News and Updates:
- In July 2020, Aave unveiled plans to hold a token swap. This means that the 1.3 billion AAVE tokens in circulation would be swapped for the newly minted AAVE cryptocurrency at a ratio of 1:100, creating a total supply of 16 million AAVE. (Three million of this would be held in reserve.)
- Avalanche is set to introduce a $180 million liquidity mining incentive program that will add more applications and assets to its growing DeFi ecosystem, bringing DeFi protocols like Aave to launch on the Avalanche public blockchain. This will allow liquidity mining incentives for Aave users over a three-month period.
Community & Whitepaper Links:
All investments are speculative and involve substantial risk and uncertainty. Investors should understand the nature of digital assets including the terms of return and the risk of assets. We encourage investors to fully understand the assets and the risk associated with them prior to making any investment.
Moonbeam is an Ethereum-compatible smart contract parachain on Polkadot that makes it easy to build natively interoperable applications.
dYdX is a DeFi protocol focusing on perpetual contracts products built on top of the Starkware layer-2 network.
Elrond hopes to be the next internet-scale blockchain by creating a high-throughput blockchain.