What is Aave?
Aave is a market protocol for decentralized non-custodial liquidity where consumers may act as depositors or creditors. In order to gain a passive income, depositors provide liquidity to the economy, whereas borrowers may invest in an overcollateralized (perpetually) or undercollateralized (one-block liquidity) manner.
Aave, operating on the Ethereum blockchain, is a series of smart contracts that allows these properties to be handled by a distributed computing network running its applications. This implies that consumers of Aave do not need to trust a specific entity or individual to administer their funds. They just need trust that their code will be implemented as written.
What is the History of Aave?
After it raised $16.2 million in an Initial Coin Offering (ICO) to build a decentralized peer-to-peer lending network, Aave started as ETHLend in 2017.
They subsequently rebranded Aave as they moved to a model of a liquidity tank. The Aave Protocol, an open-source and non-custodial liquidity protocol where users may gain interest on deposits and borrow money, was introduced by Aave in 2020.
The pioneers behind ETHLend, the successful Swiss-based decentralized digital asset-backed lending network, announced the start of Aave, a new technology company focusing on empowering citizens through innovation. The name Aave, which comes from the Finnish word for “ghost,” was selected because, with its emerging and creative technologies, the company continues to intrigue consumers.
Through launching new goods and services such as Aave Pocket, Aave Lending (SaaS), Aave Gaming, Aave Custody and Aave Clearing, the technology-based venture aims to fill the holes left by centralized financial market players such as PayPal, Skrill and Coinbase.
With ETHLend being a subsidiary of Aave, the management positions stayed the same. As CEO, Stani Kulechov remained on, as COO Jordan Lazaro Gustave, and as CMO Nolvia Serrano. As CFO, Mika Söyring joined, and as CCO, Ville Valkonen.
Mika has previously worked as CFO of Revenio Group Corporation (formerly Done Solutions Corporation), a health technology organization, and has considerable experience as an entrepreneur and a financial specialist.
Previously, Ville ran a legal consultancy company concentrating on start-ups in Finland, and also consulted with law companies, focusing heavily on small and medium-sized businesses and offering contract counseling.
How does Aave Work?
At its heart, the Aave app allows users to lend or borrow 17 distinct cryptocurrencies, like ETH, BAT and MANA, to build lending pools.
Like other decentralized Ethereum loan programs, creditors from Aave must post collateral until they can borrow. In addition, only up to the amount of the collateral they post will they borrow.
Aave enables such loans, dubbed “flash loans,” to be released and resolved immediately. Such loans need no equity upfront and exist almost immediately.
Flash loans take advantge of a characteristic of all blockchains, which is that transactions are only done until the network approves a fresh package of transactions, known as a block.
What are the Features of Aave?
Flash loans on Aave are uncollateralized loans that are given to Aave developers to create smart contracts focused on the same debt pools they lent from, possibly one of Aave’s most impressive features.
The creditor is issued these loans directly and the borrower must reimburse the loan in the same transaction. Through utilizing software such as collateralswap and defisaver, the average consumer can get access to these loans.
Borrowers who wish to partake in arbitration trading between two markets typically receive Flash loans.
Flexible Rates of Interest
Due to the “rate switching” functionality available on the website, Aave users have the ability to choose between prices. They will turn to interest rates, either “stable” or “variable.” With the unpredictable existence of cryptocurrency, this is a major benefit for users focused on earning with DeFi.
Where do I start to use Aave?
You’ll need a Web 3.0 wallet, such as Metamask, to get started. Connect to the Aave website with your wallet to deposit. You can select an asset from there, the sum you want to lend, and deposit your tokens into the lending pool. On the Aave dashboard, you will still monitor your accumulated interest.