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One of a number of emerging DeFi cryptocurrencies, Aave is a decentralized finance protocol that allows people to lend and borrow crypto.
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 (which means “ghost” in Finnish) was originally known as ETHLend when it launched in November 2017, but the re-branding to Aave happened in September 2018.
It 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.
Running on the Ethereum blockchain, Aave is a system of smart contracts that enables crypto assets to be managed by a distributed network of computers running its software.
This means Aave users do not need to trust a particular institution or person to manage their funds. They need only trust that its code will execute as written. Interesting right!
At its core, the Aave software enables the creation of lending pools that enable users to lend or borrow 17 different cryptocurrencies including ETH, BAT and MANA.
Just like other decentralized lending systems on Ethereum, Aave borrowers must post collateral before they can borrow.
Also, they can only borrow up to the value of the collateral they post. Borrowers receive funds in the form of a special token known as an aToken, which is pegged to the value of another asset. This token is then encoded so lenders receive interest on deposits.
It allows a borrower may post collateral in DAI, for example, and borrow in ETH. This allows a borrower to gain exposure to different cryptocurrencies without owning them outright.
It can also introduce additional features, such as instant loans, and other forms of issuing debt and credit that take advantage of the unique design properties of blockchains.
How Does Aave Works
Aave is probably best described as a system of lending pools. Users can deposit funds they wish to lend, which are then collected into a pool. Borrowers may then draw from those pools when they take out a loan. These tokens can be traded or transferred as a lender wishes.
To facilitate this activity, it issues two types of tokens: aTokens, issued to lenders so they can collect interest on deposits, and AAVE tokens, which are the native-born token of Aave. The AAVE cryptocurrency offers holders several advantages.
For instance, AAVE borrowers don’t get charged a fee if they take out loans denominated in the token. Also, borrowers who use AAVE as collateral get a discount on fees.
AAVE owners can further look at loans before they are released to the general public if they pay a fee in AAVE. Borrowers who post AAVE as collateral can also borrow slightly more. Thus a more advantage to users who are signed up on Aave.
The data firm Nomics has a more extensive list of AAVE’s features.
Aave Flash Loans
Aave allows certain loans, called “flash loans,” to be instantly issued and settled. These loans require no upfront collateral and happen almost instantly.
Flash loans take advantage of a feature of all blockchains, which is that transactions are only finalized when a new bundle of transactions, known as a block, is accepted by the network.
Adding each new block takes time. On Bitcoin, that interval is roughly 10 minutes. On Ethereum, it’s 13 seconds. An Aave flash loan, therefore, takes place in that 13-second period. The flash loan works like this; A borrower can request funds from it, but they must pay back those funds, and a 0.09% fee, within the same block.
If the borrower doesn’t do this, the entire transaction is cancelled, so that no funds were ever borrowed.
As a result, Aave doesn’t take a risk and neither does the borrower. A borrower may wish to use a flash loan to take advantage of trading opportunities or maximize profits from other systems built on Ethereum. It’s possible to swap different cryptocurrencies in an automatic way using flash loans to generate trading profits.
Note: Flash loans have been combined to execute attacks on lending systems built on Ethereum, sometimes successfully stealing hundreds of thousands of dollars worth of deposits.
Who Created Aave
Aave, and its predecessor ETHLend, were founded by Stani Kulechov. At the time, he was frustrated at the lack of lending applications on Ethereum, his project was built before decentralized finance even existed.
Kulechov is a serial entrepreneur who went to law school and began programming when he was a teenager. He was an early adopter in the blockchain space.
The CEO has said that he wanted to rebrand ETHLend as Aave so the company could offer a wider range of services beyond Ether lending. According to Kulechov, Aave’s main target market is people who are already engaged in the cryptocurrency community.
Aave where to buy
Some of the biggest exchanges that list AAVE tokens include CoinDCX, Binance, CoinBene and OKEx. Other great options include Coinbase, eToro and SoFi. Buy a Wallet (Optional).
One other way to buy is through Kraken. A number of crypto find it easier to purchase it through a trusted global exchange like Kraken.
Aside it has been known for being the lowest fee charge in the industry, Kraken is constantly rated one of the most secure and trusted crypto exchanges in the world.
This matters because if you lose the private key to your AAVE, it can be challenging if not impossible to recover your funds.
Which Wallet Supports Aave
AAVE is the native token of the Aave platform. It is not a cryptocurrency but rather a token that runs on the Ethereum blockchain. That means that it depends on Ethereum, and users have to pay ETH gas fees when sending it.
Its main purpose is governance. Token holders can vote on requested changes and whether new cryptocurrencies should be added to the platform for lending and borrowing. The token is essentially a share of the Aave platform.
Back when Aave was called ETHLend, the native token was called LEND. This token has been replaced by AAVE, and LEND holders can swap their tokens for AAVE at a rate of 100 LEND = 1 AAVE.
There is a max supply of 16 million AAVE, and 3 million of these may be locked up in a treasury smart contract that can be used for the development of the platform if AAVE holders vote for that. The Aave token is also used for voting as well as staking for the security of Aave protocols.
Listed below are some of the wallets that support Aave;
- Ledger Hardware Wallet – Its the most secured form of cryptocurrency wallet. Its able to store multiple cryptocurries including Aave. Ledger is a hardware wallet which you can carry on you all the time.
- BRD wallet – is a mobile wallet that offers the ability to create various types of cryptocurrency wallets including one that supports Aave. You can then receive, store and send Aave from the BRB wallet. It is free and easy to use and its mobile phone based. BRB can be found on Google Play Store.
- MyEtherWallet – It’s a web-based wallet which is free to use. MyEtherWalle stores every type of Ethereum token including Aave.
- Trust Wallet – It’s free, anonymous and easy to use. Trust Wallet is a mobile based wallet which stores lots of cryptocurrencies including Bitcoin, Ethereum and Aave.
Will Aave Go Up
Yes, AAVE price will increase according to our predicted data in future. Aave price equal to 171.651 USD at 2021-12-11.
If you buy Aave for 100 dollars today, you will get a total of 0.583 AAVE. Based on our forecasts, a long-term increase is expected, the price prognosis for 2026-12-05 is 580.585 US Dollars. … Your current $100 investment may be up to $338.24 in 2026.
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