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Aave (AAVE) price has decreased -0.83% today!

Aave (AAVE) is a cryptocurrency that operates on a blockchain. Currently, it is trading at $ 89.27 and a market capitalization of $ 1,322,111,436. The price of Aave has decreased -0.83% in the last 24 hours. Currently, Aave ranks #77 among all cryptocurrencies by market capitalization and has a daily trading volume of $ 103,806,640.

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 called AAVE, which is also a governance token that lets the community decide the direction of the protocol in a collective manner.

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.

What is the origin and 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.

At the moment, Aave has integrated, partnered, and collaborated with 30 companies, notably Curve, 1inch, and Synthetix. You can find out more information here: https://aave.com/ecosystem/.

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.

Who is the founder of Aave?

At the time of writing, the Aave team is made up of 29 individuals with Stani Kulechov as the CEO.

How does the protocol works?

Users who use the Aave platform can utilize the lending and borrowing functionality across 20 supported cryptocurrencies such as Dai (DAI), Uni (UNI), and Yearn.Finance (YFI)

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.

Borrowers could opt for the loan to be on a fixed or variable rate, whichever is the best for them.

In the latest v2 release, users can protect themselves from liquidation by swapping their collateral with a different asset.

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.

What is the AAVE token?

The token has 3 primary roles within the platform:

1. Governance

2. Incentives

3. Mitigation tool

How is the token used for governance?

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)

How is the token used as an incentive?

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. 

How is the token used as a mitigation tool?

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.

Who has audited Aave?

Since 2019, Aave has been audited 13 times and they were done by Trail of Bits, Open Zeppelin, Consensys Diligence, Certik, Peckshield, and Certora. 

Is there a difference between Version 1 and Version 2?

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.

Do I need to do anything to migrate from Version 1 to Version 2?

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.