“To all good things come to an end. We are proud to say we have launched Aave. Aave is an easier and quicker way to provide liquidity or borrow assets”.
This is a note on the ETHLend website, written a few weeks after the launch of Aave on January 9, 2020. Aave with the new features and modifications was believed to replace its predecessor, and they were not wrong. It has come up to everyone's expectations and reached a maximum of $12.2B TVL (Total Value Locked) on Ethereum.
For the time being, Aave is still considered the number one lending protocol, and the project with the highest TVL.
What is Aave?
Aave is a liquidity-based Lending protocol. Originated as a decentralized peer-to-peer lending platform (ETHLend), Aave revamped to a pool-based one.
Instead of forming a direct relationship between lenders and borrowers, Aave involves the participation of both through liquidity pools, thus diversifying the options and automating the process.
Aave provides borrowers with not only the conventional overcollateralized loans, but also the Flash Loans.
Flash Loans are the first uncollateralized loan option in DeFi. Unlike other overcollateralized loans, Flash Loans do not require any collateral since they allow you to borrow and return the assets in just one transaction block. Flash Loans are extremely useful for arbitrage, collateral swapping, debt swapping, etc. Here is an example of how Flash Loans can be applied:
What is AAVE Token?
AAVE is the native token of Aave in ERC-20 standard. AAVE is regarded as the core of the whole ecosystem, as it is not just used in staking and governance activities. The fact that it is applied as an insurance fund to depositors differentiates the token and the protocol from others.
Aave allowed the migration from ETHLend to Aave by replacing LEND with AAVE at the rate of 100:1. That being said, 13M (out of 16M ) AAVE tokens will be redeemed by LEND token holders. 3M AAVE will be generated for the Aave Ecosystem Reserve.
How does Aave work?
From a lender perspective:
Depositors can provide liquidity to the protocol to earn passive income depending on the market borrowing demand. There are two main profit sources:
- Interest rate: Lenders share the interests paid by borrowers. The APY (Annual Percentage Yield) may vary from different pools.
- Flash Loan fees: Depositors receive 0.09% of the Flash Loan volume.
From a borrower perspective:
Borrowing is a perfect way to utilize your capital. Imagine having an ideal position on one or many tokens. Now if you want to invest anywhere else, there is a chance that you may have run out of funds. To tackle the problem, selling your invested assets was the only solution. Whereas with borrowing in practice, this is no longer the case.
Borrowing can become handy for unexpected expenses, leveraging profits or capitalizing potential investment opportunities. In return, borrowers only have to pay a small amount of interest rate to lenders.
From a Dapp developer perspective:
Developers can utilise the rich liquidity pools from Aave to implement their products, especially in leveraging features such as leveraged yield farming.
Currently, the Aave ecosystem consists of 3 markets:
- Main market: The primary market of Aave.
- AMM market: Aave supports LP tokens from multiple AMMs (Automated Market Makers) such as Uniswap and Balancer.
- Polygon (Matic) market: Polygon is a side chain of Ethereum. The supported tokens are both Polygon-native and Ethereum-bridged.
In December 2020, Aave was upgraded to its version 2 with a few updates and new features:
- Gas efficiency.
- Architecture simplification.
- Code simplification.
- Debt tokenization. The debt from borrowers is now represented in tokens.
- Flash Loan V2. Aave updated the Flash Loan feature with various add-ons: Collateral Trading, Collateral Repayment, Margin Trading, Debt Swap, and Margin Deposits.
- Collateral Trading: By using Flash Loans, users can swap their collateral.
- Collateral Repayment: Users are able to swap one or multiple assets deposited in the protocol in order to use them to repay the debt completely or partly.
- Credit Delegation: Aave allows delegators (depositors) to deposit funds in the protocol while delegating their credit to other users. This allows the lenders to earn extra yield, and the borrowers to open undercollateralized loans. This is usually seen in institutions where there is a trustworthy belief between the two parties.
Detailed information about Aave Coin
AAVE Price Today
Currently, you can track the price of AAVE on Coin98 Markets.
Coin98 Markets is a website that helps users to get updates of the real-time prices, as well as view the detailed information of a Token Metric from any project. More specifically, you can access the home page or the community page of a project, or filter the coins/tokens by Market Cap, Trading Volume, etc.
AAVE Key Metrics
- Name: Aave.
- Ticker: AAVE.
- Token standard: ERC-20.
- Token type: Governance, Utility.
- Max supply: 16,000,000 AAVE.
- Circulating Supply: 13,177,230 AAVE.
- Contract address: 0x7Fc66500c84A76Ad7e9c93437bFc5Ac33E2DDaE9.
AAVE Token Allocation
AAVE Token Sale
ETHLend (old Aave) raised $16.2M in an ICO (Initial Coin Offering) in November 2017.
AAVE Token Release Schedule
All AAVE tokens have been released.
AAVE Token Use Cases
Currently, AAVE token has four main use cases:
- Staked in Safety Module to act as insurance.
- Incentives, including Ecosystem Incentives and Safety Incentives.
- Governance. AAVE can be used in AIP (Aave Improvement Proposals) creation and approval.
- Ecosystem Reserve to bootstrap the protocol.
How to get AAVE Token
You can get AAVE by participating in the protocol via lending and staking.
How to buy AAVE Token
You can buy AAVE through:
- DEXs: Uniswap, Sushiswap,...
- CEXs: Coinbase, Binance, Huobi,...
You can also swap and buy AAVE directly at the Coin98 Exchange interface at the end of this article! Coin98 Exchange is a decentralized exchange (DEX), a Multi-chain liquidity aggregator that offers users a wide variety of DeFi services (swap, stake, lend, borrow,...) through intuitive and simple interfaces.
How to store AAVE Token
You can store AAVE token on Coin98 Wallet with these steps:
Step 1: Open Coin98 Wallet & click Receive on the home screen.
Step 2: Search AAVE Token.
Step 3: Click on the correct result, copy the wallet address and send AAVE to this address.
Team, Investors and Partners
- Stani Kulechov: CEO & Founder.
- Jordan Lazaro Gustave: COO.
Aave was invested by a wide range of well-known venture capitals, such as ParaFi Capital, DeFiance Capital, Three Arrows Capital,…
Aave partners with multiple Dapps, including:
Aave also partners with Chainlink to update their price feeds as accurately as possible. This is a must in a Lending protocol as it has a strong effect on liquidations.
Is Aave (AAVE) a good investment?
I hope that with the aforementioned information, you have understood what Aave is and how Aave works. This article should give you a deep insight into the project, so there is no financial advice. You should Do Your Own Research before conducting any investment, and be responsible for your own fund. However, Coin98 will provide some notable points of the project to give you the best overview to make your own decisions.
- As mentioned above, Aave is currently the number one lending project as well as the project with the highest TVL. The updated version 2 along with the Aavenomics was an enormous catalyst behind its success.
- Before Aave (or ETHLend at that moment) was released, Compound had dominated the lending market share. However, Aave showed up with the Flash Loan being its core value, surpassing Compound to gain its current position. There was a time that the trading volume of Flash Loans in Aave got to more than $1B, showing how much this feature changed the DeFi lending market.
- The average ICO price in 2017 was about $0.0162 per LEND, or $1.62 per AAVE. At the moment, the price of AAVE has gone up approximately 250 times, and Aave has become the biggest liquidity market protocol. Therefore, if you want to invest in the AAVE token now, there is little chance that you can get a high profit.