Aave (AAVE) - a decentralized finance protocol that allows people to lend and earn cryptocurrencies.
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Description of Aave (AAVE)
It is a DeFi lending protocol that allows you to lend and borrow crypto assets by using variable and stable interest rates. Lenders earn interest by investing digital assets in specially created liquidity pools. Borrowers can use their cryptocurrency as collateral to receive a flash loan by using this liquidity.
The platform provides holders with preferential fees and also serves as a governance token, giving holders a say in the future development of the protocol. The AMM Liquidity Pool allows liquidity providers Uniswap and Balancer to use their LP tokens as collateral in the $Aave Protocol. The aDAI Uniswap pool is the largest source of aToken liquidity outside of $Aave.
What is the peculiarity of the project?
$Aave and its predecessor ETHLend were founded by Stani Kulechov. The main target market of the project are people who are already involved in the cryptocurrency community.
Aave has several unique selling points, compared to the competition:
| Choice | The project allows people to borrow and lend about 20 cryptocurrencies, which means that users have more choice. |
| Loans | One of Aave’s flagship products are “flash loans,” which have been touted as the first unsecured loan option in the DeFi space. There is a catch: they must be returned within the same transaction. |
Another big selling point is how those who borrow through $Aave can alternate between fixed and variable interest rates. While fixed rates can provide some cost reassurance during times of volatility in the crypto markets, variable rates can come in handy if a borrower thinks prices will drop in the near future.
Tokenomics
$AAVE tokens were built, based on the ERC-20 standard, and are designed to deflate. In the event of a DeFi protocol shortage, staking tokens will be used as collateral as a last resort. Some of the largest exchanges that list $AAVE tokens include:
- CoinDCX;
- Binance;
- CoinBene;
- OKEx.
The open source company's protocol is built on Ethereum, a blockchain that is currently transitioning from Proof-of-Work to Proof-of-Stake. In July 2020, Aave unveiled plans for a token swap. This means that the 1.3 billion tokens in circulation will be exchanged for the newly minted AAVE cryptocurrency at a ratio of 1:100, creating a total supply of 16 million AAVE.