Aave is a decentralized financial protocol that provides liquidity in the marketplace. This means that anyone can borrow and lend stablecoins, ether, and even bitcoins tokenized in the Ethereum blockchain. By reducing the presence of traditional intermediaries in the banking sector, Aave opens up great opportunities for anyone needing money or wishing to earn a higher income when lending.
Who Created Aave?
In June 2017, the history of AAVE began with the creation of the ETHLend platform. Stani Kulechov created this platform. He saw an opportunity to create a decentralized custodial lending market based on Ethereum smart contracts.
Kulechov’s basic idea is simple: give consumers the right to earn money by issuing loans. Third parties could take advantage of these loans, using them as leverage or simply spending them as they see fit. Gradually, they could repay the loans and rebuild their assets.
The effect of this idea was so great that in September 2018, ETHLend changed its name to AAVE. Because of this change, a transformation of its concept began as well. The AAVE project sought to take the idea of loans to the next level. To do this, it was creating the first platform for large-scale use of liquidity pools.
The company needed it to get enough liquidity for its deals. However, it wasn’t until January 2020 that the AAVE V1 core network, the protocol that made it possible, was launched. With this update, the old ETHLend platform will be eliminated. The AAVE evolution process continued with the launch of the AAVE token and finally, in December 2020, with the launch of AAVE V2, the current working AAVE protocol.
How Does Aave Work?
Aave uses the smart contract technology of the Ethereum network in its work. These are automatically executed contracts that use blockchain technology for greater security.
Aave directly connects cryptocurrency borrowers with lenders, eliminating the need to go to trusted intermediaries like traditional financing. However, as with conventional loans, Lenders can earn interest by lending their funds to others.
With borrowers, it’s just as simple:
If a user has free crypto-assets and wants them to work, Aave allows up to 17 different tokens to be borrowed. Interest payments are made in aTokens and Aave tokens, which are redeemed.
If you have ether, bitcoin, or another token and need a loan, the Aave system can help. With no red tape, taking out a loan is easy, and the user does not have to sell their valuable assets using them as collateral.
AAVE can offer decentralized lending through its liquidity pools, that is, cryptocurrencies introduced into the protocol by users who want to generate passive income through cryptocurrencies.
What Is the Aave Token?
The AAVE token provides users with various benefits, such as lower rates on the platform. In addition, AAVE is a so-called “governance token,” which means that users can vote on decisions that will affect the future of the platform.
AAVE coin can also be perceived as a service token. It allows users to access more credit and prioritize making their cryptocurrencies available for lending.
In addition, there is also aToken, a token in the AAVE ecosystem. They are used as a form of credit and are worth as much as an AAVE token, 1:1, which makes exchange possible.
Is Aave a Good Investment?
Aave, which is essentially a decentralized financial project of credit transactions between cryptocurrencies, plays the role of the main lending protocol in the cryptocurrency market. This protocol has demonstrated good governance in the sense that its developers care about the stability of the protocol by investing in upgrades, aggregating Uniswap, and leveraging the resources of the largest networks on the market. As a result, Aave is a very robust protocol, and it is among those least affected by the severe market decline.
Aave credit and escrow service are popular among DeFi users. According to CoinMarketCap, AAVE cryptocurrency is among the top 50 assets by market capitalization. High APY on deposits and stable interest on loans attract investors’ attention. Regular users most often use the Aave Swap exchange - a deposit is required to access trading.
Is Aave Safe?
The advantage of open source is that numerous users study it and work tirelessly to ensure that there are no vulnerabilities in it. The Aave credit protocol is open source, making it one of the most secure platforms for financial transactions.
An entire community of Aave maintainers tests the project to identify and fix vulnerabilities. Therefore, members can be sure that no threats will gain access to your Aave. Thus, you will have no problems with hidden commissions or risks on Aave.
Where to Store Aave?
The Aave protocol lives on the Ethereum blockchain, which means that Aave tokens can be stored on any wallet that supports the Ethereum ecosystem.
Guarda offers the best solution for storing, buying, and selling AAVE tokens. Storing your AAVE tokens with the Guarda wallet provides a secure, high-level solution with convenient functionality.
Get Guarda wallet on all possible platforms, including Windows, Mac, Android, iOS, and browsers.