What is Aave (AAVE)?

What is Aave (AAVE)?

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Aave is an Ethereum-based decentralized lending system that makes use of decentralized autonomous organization (DAO). This means that it is controlled and maintained by AAVE token holders, who vote on protocol updates.

Aave establishes loan rates and connects lenders and borrowers. While lenders receive interest on cryptocurrency assets deposited in liquidity pools, borrowers pay interest on sums borrowed from depositors.

 

Component Aave (AAVE)
Technologies PoS, Flash Loans
Market Capitalization $3.8 Billion+
Open-Source Yes
Consensus Mechanism Proof of Stake
Smart Contracts Yes
Founders/Authors Stand Kulechov
Launch Date 2017
Circulating Supply of Coins 13,451,840 AAVE
Maximum Coin Supply 16,000,000 AAVE
Mining-based Coin? No
Is Aave a Stablecoin? No
Does Aave have a burn rate? Yes
Does Aave have a Whitepaper? Yes, the white paper can be viewed here 

 

Evolution and Development of Aave

Aave is a for-profit corporation created in 2017 in Switzerland by Stani Kulechov. Kulechov received his legal education in Helsinki and founded Aave while he was still an undergrad.

The company, formerly known as ETHLend, raised $16.2 million in 2017 via an initial coin offering (ICO), during which it sold 1 billion coins of its AAVE cryptocurrency, formerly known as LEND.

A total of 300 million AAVE coin units were reserved for the Aave project.

ETHLend was distinct from Aave in that, rather than pooling money, it attempted to connect lenders and borrowers peer-to-peer. ETHLend was rebranded Aave in 2018, which translates as “ghost” in Finnish. ETHLend was acquired by Aave.

 

What makes Aave unique?

Aave is a network of loan pools. Users deposit funds to lend on the Aave platform, which are subsequently pooled. Borrowers can then use such pools to get loans. A lender may trade or transfer these tokens.

Aave releases two sorts of tokens: aTokens, which lenders use to collect interest rates on deposits, and AAVE tokens, the native cryptocurrency of the platform.

The AAVE coin has several benefits. For example, AAVE borrowers do not pay fees if they borrow in tokens. Borrowers that utilize AAVE as collateral also receive a fee reduction.

Paying a fee in AAVE allows AAVE owners to review contracts before they are published to the public. AAVE-guaranteed borrowers may borrow more.

Some unique features include Flash Loans, which are offered and cleared immediately on the Aave platform. These loans are fast and need no upfront collateral. As with other blockchains, transactions are only completed when the network accepts a fresh block of transactions.

Each block takes time to add. On Bitcoin, it is about ten minutes. 13 seconds on Ethereum. An Aave flash loan occurs in the 13-second time frame.

This is how it works: A borrower requests cash from Aave and must repay them within one block, plus a 0.09% charge. If this condition is not fulfilled, the transaction is terminated, ensuring that funds are not borrowed.

Because of this unique feature, neither Aave nor the borrower incurs a risk. In addition, borrowers can also utilize a flash loan to benefit from trading opportunities on the Aave platform or other Ethereum-based systems. 

Users can exchange different cryptocurrencies automatically using flash loans, allowing them to generate trading profits.

 

What are the main uses for Aave?

AAVE tokens can be used in the following ways:

  • They can be staked in Safety Modules to act as insurance
  • They are a medium of incentive on the platform as Ecosystem Incentives and Safety Incentives
  • AAVE tokens are also governance tokens that can be used in Aave Improvement Proposals (APIP) creation and approval
  • In addition, the Ecosystem Reserve can be used to bootstrap the protocol

 

What is the future potential for Aave?

Among Aave's future goals is to let anybody create and implement a proprietary money market on the programmable blockchain of Ethereum. Aave has published a set of guidelines to guarantee those market developers build their markets in conformity with Aave's risk policies.

Additionally, Aave aspires to complete the shift to a completely decentralized autonomous organization (DAO), which entails gradually yielding network authority to the Aave stakeholder community.

 

Price analysis on Aave

Aave was initially announced in 2017, but price data only goes back as far as 2020. The price analysis on Aave for 2020 and in recent months are as follows:

 

  2020 September October November December to date
AAVE Price High $91.68 $416.94 $339.34 $339.34 $294.20
AAVE Price Low $27.72 $312.10 $283.83 $233.10 $162.42
Market Cap $1.09B $5.46B $4.29B $4.45B $3.88B

 

Price prediction on Aave

Having watched a significant increase in DApp use over the previous year, which has pushed the price of Aave higher. Aave has had remarkable progress since the start of 2021.

With partnerships, alliances, and community support, the market expects Aave to perform, averaging $950 in 2022, which is optimistic but achievable.

With any changes in government rules and regulations, Aave pricing may see some foggy days as well. Aave price should be stable at $1200 or lower in 2023.

 

Which wallets are the best option for storing Aave?

The following digital wallets are the best option to store, send, and receive AAVE crypto assets:

  1. YouHodler
  2. MyEtherWallet
  3. Cryptio
  4. Coinbase Wallet
  5. MetaMask

 

1. YouHodler: YouHodler is a cryptocurrency-based “banking” platform that serves as a viable alternative to conventional banking. Its platform enables users to access simple-to-use bitcoin growth solutions, as well as control over crypto/fiat financial services.

 

2. MyEtherWallet: MEW (MyEtherWallet) is a free and fully open-source client-side interface for creating Ethereum wallets and other cryptocurrency-related services.

MyEtherWallet is worldwide cooperation of skilled developers and conscientious contributors that thrive on creating intelligent and intuitive tools that interface with the Ethereum network effortlessly and securely.

 

3. Cryptio: Cryptio is a crypto-financial and accounting tool designed for enterprises. Cryptio enables users to monitor assets and transactions across DeFi technologies, institutional custody systems, wallets, and exchanges to get a holistic view of their digital asset activities.

 

4. Coinbase Wallet: Coinbase Wallet is a software product that enables you to purchase and store ERC-20 tokens, participate in airdrops and initial coin offerings (ICOs), obtain rare visual art and other collectables (NFTs), browse decentralized applications (DApps), shop at merchants that accept cryptocurrency, and send cryptocurrency to other users.

 

5. MetaMask: MetaMask is the most straightforward but safe method of connecting to blockchain-based services. When engaging on the new decentralized web, users are always in control of their keys and funds. MetaMask creates passwords and keys on the device, ensuring that all accounts and data are only accessible to the user.

 

Where can you buy Aave?

Aave can be purchased from any of the following cryptocurrency exchange trading platforms:

  1. CoinDCX
  2. CoinBene
  3. CoinFLEX
  4. Binance
  5. OKEx

1. CoinDCX: CoinDCX is a cryptocurrency exchange trading platform that offers more than 200 crypto coins. It is a Singapore-based business that has been in operation since 2018.

The CoinDCX office in India is based in Mumbai. CoinDCX's unique selling point is that they support a wide variety of cryptocurrencies, including Bitcoin, Ethereum, and a variety of other altcoins.

 

PROS CONS
There is a wide range of coins that can be traded The only fiat currency supported is INR
The exchange has enough liquidity across a wide variety of trading pairs Users must undergo strict verification to achieve higher fiat values
The trading costs are low and there is an ultra-low minimum initial investment requirement  
The exchange supports instant buy and selling of coins  
Traders can participate in leveraged trading  
The exchange is available for several different devices  

 

2. CoinBene: CoinBene is a Singapore-based cryptocurrency trading platform with active accounts from around the world.

It is a convenient, secure, professional, and reputable worldwide digital currency exchange that offers real-time rates for popular cryptocurrencies such as Bitcoin BTC, Litecoin LTC, Ethereum ETH, and a variety of other currencies.

 

PROS CONS
The interface is user-friendly and there is a range of crypto pairs offered The platform does not support United States clients
The trading fees charged on the platform are extremely low Fiat currency trading is not supported

 

3. CoinFLEX: CoinFLEX is not a typical cryptocurrency exchange trading platform that can be used for spot and margin trading.

CoinFLEX This is a multi-purpose platform that combines the functionality of a universal cryptocurrency wallet with an adjustable investment portfolio with enhanced passive income alternatives.

 

PROS CONS
The platform offers spot and margin trading  The interface can seem confusing until users learn how to use it
There is a wide range of crypto assets and trading pairs, including pairs that contain fiat currencies There are some trading restrictions on some countries
The exchange offers investment programs to its users  
There is an innovative mobile application that combines functionalities of the exchange, a crypto wallet, and a retail investor account  
The commission fee schedule is transparent, and users can earn commissions according to their account balances  
The system is transparent, and all transactions are publically archived for viewing  

 

4. Binance: When it comes to investing and trading in cryptocurrencies, Binance is one of the safest and most flexible options out there. Beginners and seasoned traders alike may find Binance daunting.

However, in comparison to other cryptocurrency exchanges, Binance is free to use and has reduced costs, making it worth the learning curve involved.

 

PROS CONS
Many crypto assets can be traded There are fewer crypto-to-crypto pairs that can be traded than competitors offer
Binance has a high trust score  
The exchange is known for its high liquidity and high daily trading volume  
The trading costs are low and reasonable  

 

5. OKEx: Users can purchase Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Ripple (XRP), and many more cryptocurrencies on OKEx, one of the most reputable cryptocurrency trading applications in the world.

More than 400 cryptocurrency trading pairs are presently supported by the exchange trading platform, which offers safe and dependable digital investment management services for spot and contract trade.

 

PROS CONS
The exchange allows for the trading of a wide range of crypto assets The exchange does not accept clients from the United States
The platform provides novice traders with a choice between educational resources The fee structure can be complicated at first
The exchange is known for its high staking APY’s  
The Buy/Sell dashboard is user-friendly  
Technical support is prompt and helpful  
There are several trading opportunities offered  

 

Does Aave use coin burns?

Yes, burning AAVE now accounts for 80% of Aave fees received by the Aave system. Lenders get the rest of the money.

Token prices are projected to rise because of AAVE's inability to produce enough of the currency, assuming demand stays steady.

 

Are there criticisms against Aave?

Yes, there are some issues that the project faces. 

Aave's loans are all overcollateralized, which is a problem. Unlike the typical monetary system, there is no credit score framework or mechanism to verify a borrower's ability to pay back the loan.

Unlike typical bank loans, which require no formal security, Aave customers must secure cryptocurrency worth significantly more than the credit requested.

As a result, Aave is an imperfect capital system. Aave demands substantial financial commitments for loans, making it difficult for small customers. While this is done to safeguard creditors, it also restricts Aave's total debt.

 

What is Aave’s largest Competitor?

The compound is the largest competitor of Aave.

Both Aave and Compound are two widely used and popular cryptocurrency lending protocols. Both these crypto lending projects provide attractive interest rates.

The story of Aave's ascension from its early days as ETHLend to its expanding prominence in the DeFi (Decentralized Finance) field is amazing. The upstart platform often competes with and sometimes defeats the top tier of DeFi technologies such as Maker, Uniswap, and Curve Finance.

Compound debuted in 2017 and experienced a huge rise in investor interest in June 2020, when the price of its COMP governance token quadrupled in only five days of trading.

The price was also influenced by large cryptocurrency exchanges like Coinbase's early backing, which made it accessible to the typical US investor. Coinbase was one of the earliest investors in Compound and now gives around $40 in COMP in exchange for learning about the concept through Coinbase Learn.

Aave and Compound fight against one another for increased market domination in the DeFi arena, using innovative ideas and services to obtain an advantage over the competition.

The following post will compare Aave and Compound, as well as their investing platforms, tokens, and other DeFi loan options.

 

What is the Staking Process involved with Aave?

The staking process with cryptocurrencies is like staking a government bond or term deposit. Enabling a blockchain platform or application to use assets might earn users' interest.

DeFi apps often use the word “staking” to refer to users who invest liquidity into the network or blockchain platform. Users may assist secure the economic stability and sustainability of DeFi by locking cash into it.

These staked tokens may be used to validate transactions, vote, or as collateral. Staking crypto assets in a DeFi app is done through an exchange staking pool or a digital wallet.

When staking Aave, the native AAVE coins are placed in a Safety Module protocol native to the project. This module protects from smart contract risks, defects, exploits, and any other occurrence that could result in a loss of cash.

If such an occurrence occurred, Aave would employ the Safety Module to make up the difference. The protocol may presently employ 30% of the Safety Module.

Aave rewards holders with additional tokens for providing liquidity to the Safety Module. Unlike other cryptocurrencies, AAVE may only be staked using the Aave decentralized program (DApp).

The Aave platform generates incentives since the token is staked for contingencies rather than to verify and execute blockchain transactions.

 

What can Aave smart contracts do?

Aave, which makes use of a suite of smart contracts, lets users deposit monies into a network pool, allowing other users to have access and borrow the funds that have been placed.

Unlike traditional lending, all loans are secured by other crypto assets, and the Aave protocol always ensures that the loan's value is over-collateralized.

 

Is Aave a Good Investment?

Yes, Aave is a good investment.

Aave is now one of the greatest financing projects with a high total value locked in (TVL). The revised version 2 and Aavenomics were major drivers of its success.

Before Aave (or ETHLend), Compound controlled the loan business. However, Aave surpassed Compound with its fundamental value of Flash Loan. Flash Loans trade volume in Aave reached over $1B at one point, demonstrating how dramatically this innovation impacted the DeFi lending market.

In 2017, the average ICO price was $0.0162 per LEND, or $1.62 each AAVE. AAVE's price has risen almost 250 times, making it one of the most prominent liquidity market protocols. 

Owning On the Aave platform, AAVE users have specific benefits, such as reductions on transactions and fees. Aave has substantial liquidity being one of the largest DeFi lenders.

The Aave platform is one of the most reliable and innovative in the DeFi field. Investing in crypto involves extensive knowledge of the different platforms, tokens, and currencies, as well as the associated dangers.

Unlike the long-established and highly regulated stock and bond markets, or even ETFs, the crypto markets are young, unregulated, and fast-growing. Given the volatility of this market, there are no assurances of favourable results for investors and traders.

 

What is the supply and distribution of Aave?

 Aave has a circulating supply of 13,451,852 AAVE and a maximum supply of 16,000,000 AAVE.

 

Is Aave a viable Alternative Coin?

Yes, Aave is a good alternative coin based on the following factors:

  • Traceability – All transactions are recorded on a decentralized and public ledger, and while they can be viewed, the identities and location of users are not disclosed.
  • Hacking – Aave has not experienced any successful hacks to its blockchain.
  • Security – Aave uses advanced security measures to ensure a secure environment.
  • Future Uses – As a lending protocol, Aave has a wide range of future uses in the DeFi industry.

 

What are the differences between Aave And Bitcoin?

Bitcoin is the largest, oldest, and most popular cryptocurrency in the market. Bitcoin is the most expensive crypto asset in the crypto market, and it has a massive market capitalization that puts it at the top of the crypto list.

Bitcoin is a medium of exchange and a store of value, while Aave is one of the most popular lending protocols in the cryptocurrency space.

 

  Bitcoin Aave
Price change 20/21 +400% +220%
Market Cap $800 Billion+ $3.8 Billion+
Past Hacks None None
Popularity Very High Medium
Altcoin Rank #1 – Original Crypto #45

 

What are the differences between Aave and Ethereum?

Ethereum is the largest alternative coin and the second-largest cryptocurrency in the blockchain space. Ethereum is the largest programmable blockchain where developers can create and launch smart contracts and DApps.

Aave is one of the most popular lending platforms that rewards users for staking their AAVE tokens and providing liquidity to the platform.

 

  Ethereum Aave
Price change 20/21 +880% +220%
Market Cap $460 Billion+ $3.8 Billion+
Past Hacks None None
Popularity Very High Medium
Altcoin Rank #2 #45

 

What are the differences between Aave and Dogecoin?

Dogecoin is a meme coin that was launched in 2013 amidst the Bitcoin hype to poke fun at the cryptocurrency trends. However, despite its initial purpose, Dogecoin has some merit, and it is backed by many influential figures such as Elon Musk.

Dogecoin is a medium of exchange, and it is used to tip content creators on social platforms. Aave is a new and upcoming cryptocurrency project and lending platform with a significant amount of potential in DeFi.

 

  Dogecoin Aave
Price change 20/21 +7,300% +220%
Market Cap $22 Billion+ $3.8 Billion+
Past Hacks None None
Popularity High Medium
Altcoin Rank #12 #45

 

What are the differences between Aave and Neo?

Neo is an open-source, community-driven platform that leverages the inherent benefits of blockchain technology to create the future's most optimal digital environment.

Aave (AAVE) is an Ethereum token that underpins Aave, a decentralized non-custodial financial market system in which users may act as depositors or borrowers.

Depositors contribute liquidity to the market in return for a passive income, while borrowers may borrow cryptocurrency at a variable interest rate.

 

  NEO Aave
Price change 20/21 +160% +220%
Market Cap $1.70 Billion+ $3.8 Billion+
Past Hacks None None
Popularity Medium Medium
Altcoin Rank #69 #45

 

What are the differences between Aave and NFTs?

Nonfungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. Aave, on the other hand, is fungible, which means that one AAVE has the same value and characteristics as another AAVE.

 

What are the differences between Aave and IOTA?

The IOTA Basis is a not-for-profit organization that invented the Tangle. It is a permissionless, multi-dimensional global ledger that serves as the foundation for a global protocol for everything linked.

IOTA built a sophisticated ledger that goes beyond Blockchain to efficiently handle the difficulties of scaling, energy resource needs, data security, and transaction fees.

Aave (AAVE) is an Ethereum token that underpins Aave, a distributed non-custodial money market system in which users may act as depositors or borrowers.

Lenders add liquidity to the market in return for a passive income, while borrowers may borrow cryptocurrency at a variable interest rate.

 

  IOTA Aave
Price change 20/21 +360% +220%
Market Cap $3.6 Billion+ $3.8 Billion+
Past Hacks Official wallet hack in 2020 None
Popularity Medium Medium
Altcoin Rank #46 #45

 

What is a non-custodial liquidity protocol?

 A non-custodial protocol refers to a cryptocurrency trading platform in which the user retains complete control of their wallet and their funds.

Individuals who maintain their own wallets have total control over their crypto funds, passwords, and keys since no central authority maintains their passwords, keys, or coins.

 

Which other crypto projects use a non-custodial liquidity protocol?

Port Finance is another non-custodial liquidity protocol. Port Finance is a lending protocol that was built and launched on Solana. The platform enables the provision of a variety of lending services, including variable/fixed-rate loans and interest rate swaps.

It is currently operating on Solana because of the platform's scalability, high TPS, and very cheap TX costs.