930 views

Investing in Aave (LEND) – Everything you Need to Know

Aave is more than just another DeFi protocol on its way to the top. It is an innovative money-lending platform in the crypto space that uses radical reinventing and unique features to stay in the spotlight.

Decentralized Finance (DeFi) is a new and promising development within the cryptocurrency universe. It gives people more power over their assets and takes blockchain adoption a step closer to completion.

Spearheading this financial revolution is several money market protocols that are surging in value as we speak. One of them is Aave and its native token LEND, and the first platform of its kind to allow users to borrow cryptos without depositing collaterals for them.

This beginner’s guide to Aave and LEND should give you a clear idea about one of the most used DeFi protocols of 2020!

Aave in a Nutshell

  • Aave is a decentralized money market protocol.
  • Aave was launched in 2017
  • Aave is developed on top of the Ethereum blockchain.
  • Aave has a native token called LEND.
  • Aave enables users to access lending pools without offering collateral for their loans.
  • Aave allows borrowers to switch between fixed and variable interest rates.
  • Aave is available to buy on most of the major crypto exchanges.
  • Aave can be stored in Ethereum-compatible wallets.

What is Aave?

Aave is a decentralized, open-source, and non-custodial money market protocol running on the Ethereum blockchain.

On Aave, participants can provide liquidity to lending pools on the protocol and gain interest. Other users can access over-collateralized loans from the same pools. The deposits are tokenized as aTokens, and they accumulate interest in the long run.

Aave has big plans for the future, including introducing liquidity mining and staking rewards for users who lock up assets in the protocol’s native tokens, LEND. The staked tokens will provide the last resort collateral in case the platform crashes.

For now, the Aave platform embellishes the DeFi ecosystem with nifty features like uncollateralized loans and rate switching.

What is LEND?

LEND is the ERC-20 standard token native to the Aave protocol. LEND token holders get the right to vote on proposals from Aave’s team of developers.

LEND is periodically burned to prevent inflation and increase its value over time. More than 80% of the platform fees are frequently burned on the open market for this purpose.

In the future, Aave plans to increase users’ staking ability who’ll then get to participate in protocol governance and have a claim in exchange fees in exchange for helping secure the Aave network against malicious borrowers.

Upon its release, the distribution of LEND tokens included:

  • 30% to core developers
  • 20% reserved for the user experience development
  • 20% reserved for management and legal
  • 20% reserved for promotions and marketing
  • 10% result for unexpected costs

At the time of this writing, LEND is trading for about $0.55, and it has a market capitalization of $749,870,459. There are over 1,299,999,942 LEND tokens in circulation as of September 2020.

A Brief History of Aave

Aave was developed in 2018 by seasoned entrepreneur Stani Kulechov out of his previous project ETHLend. The former was a crypto lending platform established in 2017 that raised almost $600,000 worth of Ether in exchange for 1 billion LEND tokens.

The 2018 rebranding that the project went through saw ETHLend transform into Aave and provide many more features rightly adjusted to the emerging DeFi market.

The new denomination, Aave, is the Finnish word for “ghost,” It summarizes the platform’s ambition to provide a transparent and open infrastructure for decentralized finance.

The team behind Aave bursts with experience in the cryptocurrency space. Some of the most important names in the team include:

  • Stani Kulechov (CEO)
  • Jordan Lazaro Gustave (COO)
  • Nolvia Serrano (CMO)

Since its release, Aave’s LEND has stayed mainly in the shadows of the DeFi market, trading just below $0.1 for most of its existence. The DeFi boom of summer 2020 brought Aave to investors’ attention everywhere, and its price skyrocketed to reach $0.9 at the end of August 2020. At the moment, LEND is ranked among the top-30 crypto assets by market capitalization.

How does Aave work?

Like other money market protocols, Aave enables users to borrow and lend assets on the DeFi market. Lenders can use the capital to fund their projects, and borrowers can gain interest on their tokenized deposits in the long run.

However, Aave is more than just your regular decentralized, open-source protocol, and it brings new and unique features to the table, such as:

Flash Loans

This feature enables loaners to access deposits from the lending pool without presenting collateral for them. Instead, the protocol uses the loan’s repayment timing to ensure that the loan is paid back.

Flash loans work by borrowing and returning the loan plus a small interest in the same transaction. Participants can use them to profit from the difference in price for the same asset from one exchange to another.

Additionally, users can employ flash loans to refinance the debt or swap collaterals without repaying the loan position’s debt.

Rate-Switching

Contrary to the other money market protocols, Aave allows users to choose between fixed or variable interest rates.

Aave users can switch between stable or variable rates depending on the asset’s volatility that they are borrowing. For high-interest rates, a borrower may choose the stable rate, which is not necessarily fixed but rather more resilient to price swings.

On the other hand, a loaner that opted for a highly-volatile asset can go for variable rates to reduce loss in the long-term.

Where to Buy & Store Aave

Aave is available to buy from a wide range of crypto exchanges that include:

Because it is an ERC-20 token, you can store Aave in any Ethereum-compatible wallet, such as:

Bitcoin live price
Btc
Bitcoin
$23.403
price
0.20942%
price change
TRADE NOW

Aave may seem like a new addition to the DeFi space. However, behind it is a team of highly experienced developers and crypto entrepreneurs. Unique and radical features like flash loans and rate-switching options, show that the project is only beginning to remodel money market protocols and the financial world altogether.

Stay up to date with our latest articles

More posts

DollarMoon – A New Ecosystem Revolving Around Passive Income

Over the last few years, the crypto community has observed many trends and technological revolutions in the market. Project after project, plans and ideas came to life, some making a great impact in the market. Today we’ll look into DollarMoon, a project proposing its recipe to go "to the moon," as mentioned on its website. DollarMoon is a crypto ecosystem backed by features and technologies that we'll review today for you. What Is DollarMoon? DollarMoon is a deflationary cryptocurrency that…

CAWS – The Cats and Watches Society NFT Collection by Dypius

Dypius has created an interesting concept for all cat and watch lovers - The Cats and Watches Society (CAWS) NFT collection. The team leverages Non-Fungible Tokens (NFTs) to represent cats with luxurious watches.  This new virtual society allows users to adopt their unique cats, play with their traits, and collect rewards. This review will explain how this NFT society works by examining its characteristics and benefits. The Launch of a New NFT Society The Dypius team created the "Cats and…

World of Dypians – A New Game Enabling Users to Shape the Metaverse

As NFT and metaverse enthusiasts look for innovative opportunities in this sector, a new game is emerging in the Metaverse: World of Dypians! World of Dypians is a game enabling users to explore and shape a world of infinite possibilities. 300 selected users are currently testing the game before the Dypius team releases the Beta version for a wider audience. With creative tools, armor, and skins, players can customize their experience as they adventure toward forming their in-game destiny. With their CAT companion…

A Look at the Multiple Features offered by DYP Tools

Dypius' "DYP Tools" cater to various cryptocurrency users with an intuitive interface. Today, we'll look at the features of Dypius, from its newsroom to its swap feature, explorer tool, and beyond. Understanding What Dypius Offers Before we look at the DYP Tools platform, it's necessary to make an introduction to Dypius and its large ecosystem. Dypius is a modern project relying on the following pillars: A comprehensive suite of crypto tools: The DYP Tools page has many features and tools…

Dypius – A Futuristic Platform for Metaverse and Crypto Enthusiasts

Dypius is an all-in-one platform with many tools for seasoned crypto enthusiasts and those just entering the space. In addition, the project offers a dual token system, state-of-the-art bridge technology, and more. Its large ecosystem is an innovative hub for everything related to blockchain, cryptocurrency, and the metaverse. What Is Dypius? Dypius is a project dedicated to the exploration of blockchain and cryptocurrency technology. It's an all-in-one platform that offers users a unique set of tools connected to DeFi, trading,…

GDCC – An In-Depth Look at a New Deflationary Crypto Project

As the world moves towards a digital age, crypto projects have exploded, with GDCC standing out from the crowd. GDCC is a deflationary cryptocurrency that runs on its native blockchain and employs an innovative token-burning system. With a large ecosystem, this project offers multiple opportunities for its community. This review will look at GDCC in-depth, exploring its featherweight architecture, robustness, and cross-chain functionality. We'll also examine the team's token-burning strategy and liquidity reward mechanism. Overview of GDCC GDCC is a…

Carrieverse – Introducing a New Life-Logging Metaverse

In a world where digital life-logging is rising, a new project is looking to make a splash. Carrieverse is aiming to create an ecosystem that revolves around its Carrie and Friends IP. The project plans to release a Cling wallet, the NFT project "Kola from Space," and the crypto game "Superkola Tactics." Today's article will begin by exploring the team's vision and how they plan to make the game fun. Afterward, we will examine Carrieverse's "play, earn and own" model…

Voltreum – The First Blockchain-Enabled, Borderless P2P Energy Trading Platform

Voltreum, an India-based blockchain startup, is ready to launch Volt-X, the first peer-to-peer (P2P) energy trading application. The company believes its energy-saving solution will give consumers trading autonomy by connecting renewable-energy grids with the community and central grids. Volt-X reduces people’s reliance on fossil fuel-based traditional grids. It increases transmission efficiency, ensures fair prices, and helps the planet “breathe.” Simply put, the platform uses advanced technologies, like the blockchain, to fight climate change and help build the future of the…

Pomeranian – The Crypto Underdog Looking to Bring “Normies” Back to the Sector

Pomeranian is a crypto project looking to bring “normies” back to the crypto sector. It promises unique features that the team hopes to set them apart from many other projects. The project’s roadmap and vision statement illustrate the extensive labor behind making Pomeranian a valuable asset for the community. Let’s look at Pomeranian, review its features, and how it works. What is Pomeranian, and What Are Its Unique Features? Pomeranian is a Layer-1 EVM-compatible blockchain built to bring everyday people…

1xBit Introduces Ticket Rush for Amazing Returns on World Cup Bets

The World Cup 2022 is in full gear, captivating the attention of millions of passionate fans worldwide. Some of the best websites for betting on football offer amazing returns on World Cup wagers, and 1xBit is no exception. The crypto betting and casino platform opens its sportsbook with special tickets and unique prizes for Qatar matches. 1xBit is known for its substantial betting campaigns on sporting events. However, this new tournament is bigger and better than anything before. Ticket Rush…