Aave Protocol (AAVE) price, marketcap, chart, and fundamentals info
Aave Protocol (AAVE) is a decentralized cryptocurrency lending platform. In fact, it was the first DeFi lending protocol when it launched its first mainnet as ETHlend in 2017 (this was before the term Defi was coined).
In November 11, the protocol conducted a $ 2017 million ICO in exchange for 18 million tokens, or 975% of the total supply. The project started off as ETHLend, until it rebranded to Aave (LEND) in late 75.
Aave joined DeFi and launched alongside Kyber, 0x Protocol, Bancor, and other financial protocols.
How does Aave work?
Aave allows users to loan and borrow cryptocurrencies in a decentralized and unreliable manner. Simply put, there are no intermediaries involved and no KYC or Anti-Money Laundering (AML) documents are required to use the platform.
In short, lenders deposit their money into a "pool" from which users can borrow. Each pool dedicates a small percentage (%) of its assets as reserves to help protect against any fluctuations in the protocol. This also conveniently allows the lender to withdraw their money at any time.
Tokens are supported in borrowing and lending
There are 19 tokens available on the protocol. These include DAI, USD Coin (USDC), TrueUSD (TUSD), USDT Coin (USDT), sUSD, Binance USD (BUSD), Ethereum (ETH), Basic Attention Token (BAT), Kyber Network (KNC), ChainLink (LINK), Decentraland (MANA), Maker (MKR), Augur (REP), SNK, Injection Coin (ENJ), REN, WBTC Coin (WBTC), Yearn.finance (YFI) , and Ox Coin (ZRX).
Each property type has a different mortgage requirement. This is due to the difference in price fluctuations. Stablecoin offers a loan-to-value ratio, due to their price stability. A full breakdown of the Aave scoring process can be found in Risk Framework their.
Technology at Aave Protocol
Aave allows loans to be executed without any collateral by creating the logic that if it doesn't get repaid during block times, the transaction will be reversed. These quick loans are designed for use by developers to build capital requirement instruments for arbitrage, refinancing, or liquidation purposes.
An example is as follows: If a user borrows on Maker and the collateral price drops causing it to near liquidate, they can use a quick loan to pay back the Maker loan and get back your collateral. surname. They can then sell the collateral to pay off the quick loan. Hence avoid being liquidated for Maker without actually having the necessary funds to repay.
Another unique feature of Aave is that it allows borrowers to switch between fixed and floating rates.
Traditionally, the volatility of interest rates at DeFi makes it difficult to estimate long-term borrowing costs. If a user predicts that interest rates will increase, they can convert their loans to a fixed rate to block future borrowing costs. If they expect interest rates to drop, they can switch back to floating to reduce borrowing costs.
There is an exception where the real fixed rate can change and that is if the deposit rate rises above the fixed loan rate because the system may become unstable by paying more than the amount paid. . In that case, the fixed rate is rebalanced with the new stable rate. Another scenario works on the borrower
What is AAVE Token?
AAVE is a native token used for protocol management. AAVE is converted in the process of moving from the name LEND to AAVE with a ratio of 100: 1.
Basic information of AAVE token
|Token type||Native token|
|Circulating supply||11.665.455 AAVE|
|Total Supply||16.000.000 AAVE|
AAVE token allocation
- Core development: 30%
- User experience development: 20%
- Management & legal: 20%
- Promotions & marketing: 20%
- Unexpected costs: 10%
AAVE token sale
- End date: November 30, 11
- Tokens Allocated: 1.000.000.000 AAVE
- Price: 0.0000376 ETH equals 0.0162 $ per AAVE
- Total Collected: 37600 ETH equivalent to $ 16.200.000
The token sale is divided into 4 rounds, summarized as follows:
- Pre-sale price: 1 ETH = 30.000 LEND (price includes 20% bonus token)
- First round: 1 ETH = 27.500 LEND (10% bonus)
- Round 2: 1 ETH = 26.500 LEND (5% bonus)
- Round 3: 1 ETH = 25.000 LEND
That is to manage the treasury, 300 million tokens have been allocated to the Development Fund for the core team, in accordance with the following requirements:
- 80% is locked after the Token Sale distribution ends
- 60% is locked after 6 months
- 40% is locked after 12 months
- 20% is locked after 18 months
- 0% is locked after 24 months
What is AAVE token used for?
AAVE token will be used to manage the Aave protocol.
- Burn token: Tokens are burned from fees collected from the Aave Protocol, with around 80% of platform fees used. This shows that AAVE will have a higher value over time.
- Holder token: May require protocol fees in exchange for acting as the first line of defense in the event of liquidation events by bad borrowers.
- Governance: AAVE can be used to vote for Aave improvement proposals (AIP). The supply token holder can vote with the AAVE number deposited on the Aave platform, even if it is being used as collateral.
How to earn AAVE token?
When learning about the project you should also learn about how it works as it will help you define your purpose on the platform. Moreover, it also assists you in identifying the right Aave tools for optimal results.
Methods of making money with AAVE token include:
- Liquidity mining: Get rewarded for providing liquidity that creates individual currency markets to facilitate better lending services to lenders and borrowers.
- Yield farming: With the yield farming tools, users will be able to stake AAVE and create an optimal profit on their assets. Farmer can stake or check which lending pool gives the best yields.
- Exchange: And the simplest way to own AAVE token is to buy on a listed exchange.
What floor is AAVE traded on?
Evaluate the potential of Aave Protocol
Three Arrows Capital
Secured lending is one of the largest financial markets in the world, with a total size in excess of $ 20 trillion. Although Aave could not have captured more than a small percentage of that, the sheer size of the total market could address suggest Aave had plenty of room to grow.
Some examples of secured loans are home mortgages and equity, property rentals, car loans, and corporate or equity based loans. The scope for Aave to enter this market is enormous, but also depends on the assets and loan products the protocol supports.
Compare Aave and Compound
Being mentioned many times is definitely Compound. Both are overly centralized and efficient crypto lending protocols in the same way.
Both include lender's assets in the lending pool from which the borrower can get, both have governance token and together with MakerDAO are the biggest protocols in DeFi in terms of “assets under management” (AUM ).
However, let's point out a few differences between the two
- Compound is much less complicated and therefore doesn't offer as many features as the Aave.
- Aave offers a steady rate, Compound doesn't
- Aave allows you to switch between steady rate and variable rate, Compound doesn't
- Aave has Flash Loans, Compound doesn't
- Lending and borrowing properties in Compound are less
The future of Aave protocols
Aave is a very promising project. Compared to other DeFi loan protocols, it offers a treasure trove of development features, assets, and tools to allow developers to deploy these similar features into their own DeFi projects.
Community & Social
Should we invest in AAVE token?
Considered one of the best performing assets of 2020, with a return of 4200% this year. After bottoming out in 2019, Aave's fundamental growth pushed prices much higher despite poor token economics.
Aave is seen as an undisputed leader in the DeFi market and is beginning to disrupt its competition through various product offerings. Since the project targets a market worth trillions of dollars, this is the limit for the development of the project.
Investors who want to invest in AAVE tokens, ... should consider the possible risks. Hope this article partly supports and makes your investment decision. Please take responsibility for your money. Thanks!