About Aave Coin
Aave price today is $318.40 with a 24-hour trading volume of $787,357,199. AAVE price is down -6.0% in the last 24 hours. It has a circulating supply of 12 Million AAVE coins and a max supply of 16 Million. Balancer is the current most active market trading it.
Aave is a decentralized money market protocol where users can lend and borrow cryptocurrency across 20 different assets as collateral.
The protocol has a native token Aave, which is also a governance token that lets the community decide the direction of the protocol in a collective manner.
The lenders can earn interest by providing liquidity to the market, while borrowers can borrow by collateralizing their cryptoassets to take out loans from the liquidity pools.
A brief history of Aave
Aave was previously known as ETHLend when it was founded in November 2017 by Stani Kulechov and has successfully raised $16.2 million through an ICO round.
ETHLend was then rebranded to Aave in September 2018.
Its native token, Aave (AAVE), was launched in October 2020 as one of Aave’s initiatives to become self-governed. Following the token’s launch, a 1:100 token migration must be made from the old token.
Fun fact: Aave is a Finnish word translated to “ghost” in English, which illustrates the protocol’s goal to be transparent and an open infrastructure in DeFi.
Team behind Aave
At the time of writing, the Aave team is made up of 29 individuals with Stani Kulechov as the CEO.
What is the purpose of Aave?
To understand the purpose and function of Aave, we will split it into two parts:
● Aave, the protocol
● Aave (AAVE), the token.
Aave, the protocol
The lenders can earn interest by providing liquidity in the market. There will be two sources of earnings by providing liquidity: (1) the interest rate paid on loans and (2) a percentage of flash loan fees.
The borrowers could opt for the loan to be on a fixed or variable rate, whichever is the best for them.
Additionally, Aave v2 allows users to swap their collateral to another asset. This helps to avoid loans from being underwater and facing potential liquidation.
Lastly, Aave’s main unique product is a “flash loan” where borrowers can take up the loan with zero collateralization. However, the borrower must pay back the loan and any additional interest, plus the fees within the same transaction.
Aave (AAVE), the token
Aave (AAVE) has three prominent roles within the Aave platform:
AAVE can be used to vote and decide on the protocol’s upgrade via Aave Improvement Proposals (AIPs).
(Image source: https://docs.aave.com/aavenomics/governance)
AAVE can be staked within the protocol, and the users can earn the protocol’s staking rewards and fees. There are two ways to stake: (1) Stake AAVE and earn rewards in AAVE or (2) Stake Balancer Pool Token (BPT) and earn AAVE, BAL, and trading fees from Balancer.
In the event of associated shortfalls, the staked AAVE will act as insurance to cover the deficit.
For example, your staked assets will be slashed up to 30% when Aave protocol is in a deficit state for the liquidity providers.
Has it been audited?
Since 2019, Aave has been audited 13 times and they were done by Trail of Bits, Open Zeppelin, Consensys Diligence, Certik, Peckshield, and Certora.
For more information, please refer here.
Is there a difference between Aave v1 vs. Aave v2
Aave’s second iteration has introduced several interesting new features.
One of the notable ones is the collateral swap feature. This allows users to swap their collateral to another supported asset at any given time. It is a great feature, especially for those who want to avoid liquidation.
Another feature is loan repayment with collateral, enabling the borrowers to close their loan positions by paying directly with their collateral in just one transaction.
You can find out more about the new features here.
Do I need to do anything for Aave v2?
Aave v2 is just a protocol upgrade and its native token won’t be affected by the changes.
Hence, if you are holding AAVE, you do not need to do anything.
Additionally, if you have loan positions on Aave v1, you do not need to close them either. Aave released a migration tool to help you migrate your positions. To know more on how to migrate your loan positions, kindly refer to this blog post.
Can I long or short Aave?
Yes, you can long or short Aave via perpetual swap or futures such as FTX, Binance Futures, and OKEx.
These derivative exchanges are not formally regulated and can provide even up to 125x leverage. Derivative contracts are high-risk products, and you might want to understand what you are doing before participating in them.