Aave Review 2021

With a market size of billions, the Aave protocol appears to be a giant underlying mechanism for numerous marketplaces. It is primarily designed for lending and borrowing digital assets and cryptocurrencies. Stable interest rates, attention tokens, huge lending pools for various crypto assets, collateralized loans make only the tip of the iceberg that Aave protocol can manage.

Making good use of their tremendously expanding market size, the protocol’s lending platform is positioned to become the leading choice for all DeFi lending transactions. Users can borrow funds from other Aave users, and some assets have variable interest rates (as per the demand and supply in the market and other factors), while others have much more stable rates.

Aave protocols allow the largest range of collaterals for DeFi and the liquidity that supports its large market share.

Quick Overview of Aave

  • Crypto based protocol that allows users to earn interests on deposits and borrow assets.
  • Aave is a well-known liquidity protocol with significantly larger liquidity pools than its competition.
  • The Defi lending protocol is open source, enabling customizations for developers.
  • Offers stable rates for borrowing selected assets, although variable interest rates are observed for some assets.
  • The lending platform provides collateral swaps (which is not common on decentralized platforms).
  • There is also an option to get flash loans (of a small amount) and are not collateralized.

How Did Aave Started?

Aave protocol was created in 2017 by Stani Kulechov, CEO of Aave. Originally, Aave was inspired by the Ethereum blockchain and used LEND as the token. After its initial offering, it was able to raise over $16.2 Million.

Since its inception, Aave has come a long way from where it started and is one of the leading platforms in the exponentially growing domain of Decentralized Finance (DeFi).

An idea of transparency and a completely open infrastructure for a digital financial system (based on blockchain) is what drove its creation and success. Aave brought some unrivaled features and functionalities to the market and quickly rose to acquire a large market share. On its journey, Aave protocol also started various additional ventures in decentralized finances.

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What Is Aave?

Aave protocol is a non-custodial protocol for liquidity providers and borrowers. With some of the largest market sizes and lending pools across the blockchain world, Aave has become a common name for cryptocurrency and blockchain experts.

Aave has made the process of lending and earning interests on digital assets an easy and instant one. In addition to loans, here users can also get a flash loan from its DeFi lending market. These flash loans are not collateralized and are subject to fees; however, the maximum amount of such loans is usually kept it low.

A diverse and impressive list of stakeholders ensures good governance of the platform and also actively contributes. This adds to the community experience, especially for beginners or relatively new users. The platform also offers aTokens (Aave interest-bearing tokens) to help users earn through liquidity mining indirectly. Through Aave, one can earn interest on various stablecoins such as aUSDT, aDai, etc.

How Does Aave Work?

Aave serves as the foundation of lending and borrowing digital assets and cryptocurrencies. The protocol can be used to borrow or lend crypto, which can then return interest. The transactional fee is free for some tokens, although the protocol charges for flash loans.

The interest rates for some assets are stable, which comes as one of the advantages of having such a large scale of operating and usage. Aave supports over 15 crypto assets, even if not all can be used for collateral purposes when applying for a crypto loan. These assets include (but are not limited to) ETH, ETHlend, etc. 

How to Use Aave?

Users do not need to complete any KYC (Know Your Customer), and can lend or borrow funds easily. To access one’s Aave account, one needs to connect their wallet to the platform. They need to select the wallet they use, and once it is connected with the Aave account, then the user can use the features that protocol brings to their disposal. 

New users can create a wallet and connect to the protocol. While signing up with Aave, users must fill in their basic contact details and register on the platform. The list of supported wallets is right from the Ethereum Mainnet or Polygon Mainnet. No other options are supported on the platform as it was originally launched for the Ethereum blockchain.

Aave Reviews: Pros and Cons

Pros Cons
Huge lending pool available for various digital assets. Not as user-friendly as some of the alternatives.
Offers more features for digital lending/borrowing. A small list of supported e-wallets.
Stable interest rates for some of the crypto assets. Lacks high incentives for users to lend or borrow.
Flash loans, a revolutionary feature of DeFi, is available that requires no KYC. Flash loans have been exploited by hackers in the past.

Benefits & Features of Aave

Aave protocol has risen to one of the highest ranks with the help of its unique features and unparalleled benefits to the individuals on the platform.

Aave offers instant lending and borrowing that is one of the most beneficial characteristics of the protocol. In order to maintain a safe environment, the transactions have to be carried out with proper details, which reduces the possibility of an error. Being a open-source in nature, the protocol code is open to developers who wish to use the protocol in their own ways and still get all the benefits and features that come alongside it.

Aave is also beneficial for the users who happen to trade high volumes of funds frequently.

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The features of the Aave protocol keep up with the benefits and are plentiful. Most of the platform’s features do not need users to complete their KYC and can operate instantly. Instant transfer of funds and unique functionalities like flash loans adds to the possibilities and improves the experience. Some of the cryptos have stable rates that make the process of paying interests much more manageable.

Aave is open source and also offers a Git library for the developers. This leaves room for an entirely new domain of capabilities and extensions. A lack of anti-money laundering measures makes the process even faster.

Aave Pay is yet another highly convenient feature that allows residents of Europe to send money quickly in fiat currencies (in exchange for their cryptocurrencies).

How to Buy & Store Aave?

Buying and storing digitally has become an easy task through various platforms available. Individuals need to be registered on the platform of their choice. Once logged in, the users can verify their accounts. Verified users can purchase Aave by adding fiat deposits (paying for Aave with fiat currencies). Users can use their respective exchanges and buy Aave (AAVE).

Aave is not compatible with every hard wallet (or technically, its native tokens are not supported by every wallet). If one wishes to store their Aave tokens, they must use Ethereum blockchain’s compatible wallets, and the same is applicable for the soft wallets.

How to Lend on Aave?

Borrowing on Aave

To borrow on Aave, the users need to fulfill the criteria. Borrowers who wish to get a loan (not a flash loan) must deposit collateral for lock-up. The amount of the collateral offered for lock-up by the borrowers must be higher than the relative amount of their borrowings. The funds are taken out of the liquidity pool.

Locked-up terms can be sold by the platform in case of default to recover the earnings. This process is automated, which ensures that the liquidity pools are positive. Moreover, click here to get detailed information on borrowing interest rates.

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Lending on Aave

Aave has a large number of lending pools where one can earn interest on their digital assets. The decentralized nature of lending makes for a seamless process for lending instead of the traditional institutions that often became a limiting factor.

The lenders are assured by the platform for the safety of their assets through the reserves that are kept by Aave. These reserves add a cushion against market volatility and crashes. The interested lenders can connect their Ethereum wallets to the platform and then select the asset they want to lend.

After entering the amount of asset to be lent, users’ funds become a part of the liquidity pool of the corresponding asset, and users can earn interest on them.

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Aave Lending Rates

While Aave does have stable rates for some assets, most remaining assets have variable interests, which might be subject to market fluctuations. The users can switch between these two kinds of rates per the current percentage and reduce the overall interest.

One thing to keep in mind is that this switching costs an Ethereum gas fee every time. The website shows a live rate charge for the assets’ varying interest rates. Since variable rates fluctuate, they might end up being higher or lower than the stable rates.

Aave Pay

Through Aave Pay, the convenience of the platform pinnacles. Aave pay enables the users in Europe to send funds to other accounts right away in fiat currencies (for their cryptocurrencies).

A flash loan can be taken from the platform and used to make payments to any institution in fiat currency (removing the need to sell or declare their crypto holdings).

What Are aTokens?

aTokens are native interest tokens of the platform. aTokens refer to ‘Aave Interest Bearing Tokens’ that can be minted or digitally mined on the platform. These aTokens can either then be exchanged or loaned out to borrowers.

aTokens come with a free-transaction cost and can acquire an interest in real-time. aTokens also have an extra edge as they are equated 1:1 with their underlying asset.

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Aave Supported Wallets

Since the protocol is built for Ethereum, only Ethereum Mainnet and Polygon Mainnet wallets are supported.

Wallets on Aave Network

Not all wallets accept the platform’s native tokens, and thus, users are advised to shift to one of the compatible wallets for storing their holdings and data. Below is the list of some supported wallets on Ethereum Mainnet and Polygon Mainnet:-

  • Portis
  • Ledger
  • MEW wallet
  • Coinbase
  • Authereum
  • Wallet Connect
  • Torus
  • Fortmatic
  • imToken
  • Browser Wallet

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Future of Aave

The past speaks for itself while the present is glistening bright. Following its growth and expansion graph, Aave seems destined to grow to be one of Decentralized Finance (DeFi) leaders and experience exponential success with its ever-growing behemoth of a liquidity pool. Additional support in the form of compatibility with the tokens from different wallets can also increase its market share and extend its user base.

Security of Aave

The team behind the protocol looks to have kept security as their highest priority. Constant checks for vulnerabilities and auditing of the protocol is how it is kept safe.

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Being open-source, the protocol is open to regulation of the underlying code. The team also tries to make users aware of their security updates through their blog. The admin keys further help in security and governance on the platform. Aave protocol has been able to secure live feeds for about 54 cryptocurrencies.

To add a very enticing incentive for reporting bugs, the team also offers a reward of up to $250,000 if the reported bugs and vulnerabilities happen to be critical.

Aave Customer Support

In order to add support, the team is rumored to be working on a governance protocol that is expected to be as revolutionary as flash loans. To reach the team, users can choose from different channels through which the team communicates with. These channels include email, Discord, Twitter, Instagram, Telegram. Aave has been able to stay reputed for its prompt customer service despite its huge user base. 

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Aave Review: Conclusion

Aave is an excellent protocol for advanced users and also offers some truly unprecedented features and benefits for high and low-volume users. Easy and instant lending protocols make it a wise choice for those familiar with the ins and outs of crypto-based lending and borrowing.

FAQs

Is Aave Legit?

As one of the largest loan providers with a highly efficient and intuitive protocol, Aave appears legit and stands at the top of most recommendations lists.

How Does One Make Money on Aave?

To make money on Aave, users need to deposit their crypto assets on the Aave platform. Once these assets become part of the liquidity pool, the loans are drawn by the borrowers from this pool, and the lenders earn interests, thus, making money and more.

How Does Use Aave’s Services?

Users can use Aave’s services by connecting their compatible Ethereum Wallet with the platform and proceeding to lend or borrow funds. Aave Pay is another service that users can use to pay with fiat currencies in exchange for cryptocurrencies.

Is Aave a Scam?

An impeccable track record and gigantic user base add to Aave’s credibility. The constant monitoring of the protocol makes it a good and reliable protocol for trading crypto assets (thus, not a scam).

However, investing in cryptocurrencies and DeFi comes with the risk of loss due to consistently fluctuating markets. It is always recommended to gain extensive information on the subject before investing.

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