Aave is a lending platform originally known as ETHLend, but with a radically redesigned strategy. While ETHLend enabled direct lending relationships between lenders and borrowers, a decentralized pool-based strategy began with the release of the Aave protocol. We offer an overview of this platform from the editors of Profinvestment.com.
The lending pool works like this: Users create liquidity by depositing cryptocurrencies into the pool. Other users can use these funds, leaving others as collateral. Loans are not selected individually - the same conditions exist for everyone, which are adjusted depending on the current state of the pool. All operations are managed by smart contracts.
The interest rate is determined algorithmically for both borrowers and lenders. It depends on the ratio and value of the funds currently available in the pool.
LEND is a token created to control the protocol. Its owners can participate in voting for certain changes in the project. All voices are hard coded, and the actions that follow them are invariably executed.
You can trade the LEND token on the Binance cryptocurrency exchange. The pairs presented are: LEND/BTC, LEND/BNB, LEND/USDT, LEND/BUSD, LEND/ETH.
#Binance Lists December Community Coin - #ETHLend (LEND)@ethlend1 https://t.co/mXVFgg9yOD
— Binance (@binance) December 12, 2017
general information
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| Name | Aave |
| Ticker | LEND |
| Token type | ERC-20 |
| Blockchain | Ethereum |
| Total emissions | 1 299 999 941 LEND |
| Current issue (as of 08/27/2020) | 1 256 361 931 LEND |
| Rate (as of 08/27/2020) | 0,84 $ |
| Market capitalization (as of 08/27/2020) | 1 056 622 843 $ |
| Official site | https://aave.com/ |
| https://twitter.com/AaveAave | |
| White Paper | https://github.com/ETHLend/Documentation |
| Source | https://github.com/aave |
| Exchanges | Binance, HitBTC, AEX |
Safety
Deposited funds are placed in a DLP (decentralized lending pool). The public open source of smart contracts is officially verified and confirmed by independent auditors. Funds held as a deposit can be withdrawn upon request or transferred as collateral for a loan.
The Aave protocol allows any user to interact with the system through the user interface, directly with Ethereum smart contracts, or via an API. Open source means that you can use it to create applications that are useful for your own product if the need arises.
The platform supports wallets: Ledger, Coinbase, WalletConnect, Formatic and a number of browser wallets.
What features does Aave offer?
Flash Loans
Flash loans are one of the main features of Aave. While DeFi lending typically requires collateral, most lenders (like MakerDAO) allow users to borrow up to 75% of available collateral to protect against market volatility.
In turn, Flash Loans work through a smart contract, with which you can borrow funds without collateral with the condition that the loan will be repaid within one transaction (one block). The method is used by traders to make money on arbitrage, since it makes it possible to borrow funds unlimitedly for free until the loan is repaid.
This is quite difficult for a beginner, and the developers recommend using this lending method only for those who are well versed in Ethereum, programming and smart contracts.
Flexible interest rates
The interest rate strategy on the Aave platform is calibrated to provide maximum performance optimization and reduce risk. Interest rates on loans depend on the utilization rate of a particular cryptocurrency. It is based on the indicator of the presence of cryptocurrency in the pool:
- If there are enough funds, then low rates are set, which stimulate lending.
- If funds are scarce, high rates are set for liquidity providers to encourage them to invest capital.
A nice feature of Aave is the ability to switch at will between fixed and variable interest rates, choosing the most profitable option at a particular moment. Thanks to this flexible structure, Aave has been in high demand since its deployment. Fixed interest rates are not exactly fixed, but rather simply more stable and less susceptible to market fluctuations.
Technical features
The mechanism of the former LEND is similar to the protocols of similar DeFi projects, for example, the popular Compound. Features the integration of several advanced delivery methods.
Functions:
- switches bets according to a profitable option;
- supports unsecured lending;
- applies cryptocurrency flash loans;
- works with 20+ assets.
Features of the Aave (LEND) protocol:
- instant deposits and withdrawals;
- cryptocurrency multi-collateral;
- variable/fixed rate;
- DeFi insurance fund;
- GraphQL and API developer tools for creating DLPs-based applications.
Fixed rates are formed by generating data from several cryptocurrency lending platforms and then calculating the average value. The profitability of variable/fixed rates varies depending on market conditions associated with the collateral assets.
For example, floating rates are chosen by participants who anticipate an imminent fall in the collateral cryptocurrency’s quotes.
How to make money on deposits
You need to connect to the pool using any decentralized wallet, for example, browser-based Metamask. There must be funds on the balance. Then click the “Deposit” button next to the asset you want to deposit (coins and tokens running on the Ethereum blockchain are supported). Once the transaction is completed, you will start earning interest. In this case, the deposited tokens are converted into an equivalent amount of aTokens .
aTokens holders receive continuous income based on the following indicators:
- 70% commissions on flash loans.
- Interest rate on loans. The average borrowing rate multiplied by the currency utilization rate. On the main page or in your personal account, the specific current rate for the desired token is always indicated.
You can also go to the page of any coin to view the history of interest rate changes.
There is no minimum or maximum limit, but if you deposit too little, there is a risk that the transaction costs of the process will exceed the profit. For one asset, a one-time deposit is allowed at either a stable or variable rate, but not both options at the same time. You can withdraw funds at any time without any penalties.
Technology and Application
Aave is trying to solve some of the most pressing problems facing traditional lending services. As with all DeFi, the main goal of the project is to transform centralized financial services into their decentralized equivalents. In a conventional lending scenario, banks lend your funds and earn interest. Even if they lend your money, you will never get access to those lucrative interest earnings.
Everything is changing in the Aave ecosystem. Anyone can lend their cryptocurrency to other users without trust or permission. Interest earned from lending out your assets is paid directly to your online wallet. In this way, Aave helped revolutionize peer-to-peer lending and helped create an entire DeFi sector with the same goals.
How to get a loan
Lending on Aave allows you to obtain working capital without selling your assets. To get a loan, you must deposit any asset that will be used as collateral. Then go to the Borrowing section and click Borrow on the asset you want to receive. Set the desired amount (the maximum amount depends on the available deposits used as collateral).
Choose a stable or variable rate - you can change it later at any time by simply going to the dashboard and clicking the button to change the APR type for the desired asset.
The interest rate depends on the relationship between supply and demand for a given asset. In this case, the stable one remains the same as it was at the time of taking, and the variable is constantly changing. There is no fixed loan repayment period. The main thing is to maintain the so-called “health factor”, an analogue of LTV, at the proper level.
Description
Aave is a decentralized cryptocurrency lending platform.
In fact, it was the first DeFi lending protocol when Aave launched its first mainnet as ETHlend in 2017 (this was before DeFi even existed!).
ETHlend/Aave founder Stani Kulechev is passionate about working with leading developers from other projects in the DeFi space and is focused on ensuring the platform is attractive to institutional and retail investors both inside and outside of crypto.
In short, ETHlend was a kind of marketplace where borrowers and lenders could negotiate terms without third party involvement. You can think of it as a job board, but instead it's filled with loans. The platform was moderately successful, but the team decided that they were "ready to become serious players" in the DeFi space.
Purpose of the LEND token
Aave's native token, LEND, is an ERC-20 token with a total supply of approximately 1.3 billion, of which a billion was sold during the ICO stage. It was initially used as a utility token of the ETHLend platform, which helped reduce fees, improve interest rates and LTV.
However, when ETHLend was replaced by the decentralized platform Aave, the LEND token gained additional uses, including platform management. Token holders have the right to vote on proposals from the development team regarding key parameters of the system.
conclusions
If you look at the Aave rate, you can see excellent dynamics. Over several months, the growth ranged from 30 dollars per coin to 530. At the time of writing, the token is in a correction.
For investment, it is worth considering the level of the Aave cryptocurrency on the chart at 280–300 USD - this is 50% of the historical range. Considering the volatility of crypto assets, the rollback may be deeper - to strong levels of about 200 and 100 USD per coin.
The outlook for the protocol is positive - the Aave cryptocurrency pool has a good outlook and a competitive advantage thanks to the unique Flash loans feature. Managed by twenty reputable professionals. And also does not lose to similar DeFi sites in terms of alternative operations.
Are you already working with the Aave platform or are you just planning to?
Where to store LEND
Any wallet that supports ERC-20 tokens will do. The list of such wallets is quite large, for example:
- Web wallet MyEtherWallet
- MetaMask browser extension
- Desktop and mobile Exodus
- Hardware Trezor, Ledger, KeepKey
- Desktop and mobile Atomic Wallet
Choose options with a proven reputation and a high level of security.
Where to buy/sell LEND
You can purchase the LEND token on the Binance, HitBTC and AEX exchanges. As an example, let’s consider buying an asset on Binance - this is the most popular and in-demand crypto exchange with wide functionality and the ability to buy cryptocurrency for fiat (after verification).
The process looks like this:
- Create an account at https://www.binance.com/ru or log into an existing one.
- Top up your account if necessary. On our website you will find material with a detailed analysis of all methods of depositing and withdrawing funds to Binance.
- Go to the “Spot Wallet” section and use the search bar to find the LEND token we need.
- Click the "Trade" button.
- Choose which currency pair suits you. At the moment, LEND is traded in pairs with BTC, BNB, ETH, BUSD, USDT.
- Select the type of order (the market allows you to instantly buy an asset at the market rate, and the limit allows you to specify your price, and then the purchase will be completed as soon as the rate reaches this level).
After receiving tokens, try to immediately withdraw them to an external wallet for further storage if you do not plan to continue operations with them in the near future. Storing on an exchange is not considered safe.
Recommendations
AAVE is quite an attractive asset to invest in, especially considering its capabilities. Positive news and active trading, as well as the forecast for this cryptocurrency, indicate that now is the best time to buy AAVE. If you read any other review, you will notice that the price of AAVE is more likely to rise than to fall. However, we recommend not to make hasty conclusions and carefully monitor this asset.
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