Aave, which was originally released under the name ETHLend in November 2017 but changed it to Aave in September of 2018, has gained massive attention for binging a lending and borrowing protocol to the blockchain. With its platform, users can put there cryptocurrencies and tokens to work and earn interest from lending it out. Furthermore, users can also take out a loan collateralized by crypto. In this post you will read about what Aave is.
What is Aave?
Aave is decentralized finance (DeFi) protocol built on the Ethereum blockchain which allows its users to borrow various cryptocurrencies, without the need of a intermediary such as a bank. Furthermore, Aave also allows users to lend out there cryptocurrencies. In return the users get interest over there deposited cryptocurrencies.
Within the Aave ecosystem, smart contracts play an important role. From facilitating the borrowing process to making some innovations possible. One such innovation is “flash loans”. Flash loans are loans without collateral but only work if the borrowed amount is returned within the same transaction. This sounds weird (and in a way it is) but it comes down to this. If an asset on exchange A is cheaper than exchange B, you can borrow for example 1 bitcoin. Sell it on the platform B (where it is cheaper compared to exchange A) and buy it again on exchange A, immediately returning the loaned bitcoin. With this, the trader that loaned the bitcoin makes a small profit based on the price difference between the two exchanges, something also called arbitrage.
Another concept that the Aave platform introduces is something called “aTokens”. aTokens are interest-bearing derivative tokens that are minted and burned upon the deposit or withdrawal of assets from the Aave platform. A user depositing there digital assets receives upon doing so an equal amount of aTokens as there worth in deposited digital assets. With these aTokens users earn a share (equal to the amount of aTokens they have) of the pool of which all the crypto is staked, and that is in essence returned to the user as interest. Simply put are aTokens derivative tokens that represent a share of a pool in which all the deposited assets are stored and accrue interest.
Last but not least is the Aave token itself. Users can use the token for lower transaction fees, staking and they can use it to vote on proposals within the Aave ecosystem.
The team behind Aave
Aave has come a long way since its inception. Down below we have listed the most important team members behind the Aave project.
Stani Kulechov (Founder and CEO): is the founder and CEO of Aave. Stani has a background in law and finance and is the main player in regards to the financial regulations of Aave.
Jordan Lazaro Gustave (COO): Jordan Lazaro Gustave is the Chief Operating Officer of Aave. He has a background in innovation management and is responsible in overseeing the operational aspects of the Aave protocol.
Emilio Frangella (CTO): Emilio Frangella serves as the Chief Technology Officer of Aave. With a strong technical background and expertise in blockchain and smart contract development, Emilio has been instrumental in shaping the protocol’s technical side.
Radek Ostrowski (Smart Contract Developer): Radek Ostrowski is a key member of the Aave team that is primarily focused on the development of smart contracts and security of the smart contracts.
Ajit Tripathi (Advisor): Ajit Tripathi is an advisor to Aave. With a wealth of knowledge and experience within the financial and blockchain sector, Ajit will provide the Aave team with important strategical guidance and industry insights.
Partnerships
Besides the team that is really important to Aave, Aave also relies heavily on partnerships in order to make its DeFi solution more accessible. Down below we have listed the most important partnerships of Aave.
Polygon (formerly Matic): Aave has partnered with Polygon, a scaling solution for Ethereum, to make faster and cheaper transactions possible. With this, users enjoy the security and decentralization of the Ethereum blockchain while also enjoying the speed and cost effectiveness of it.
Chainlink: Aave has integrated with Chainlink, a decentralized oracle network, in order to access reliable and accurate price data for various cryptocurrencies. Chainlink’s oracles provide Aave with up-to-date market prices, enabling the platform to calculate interest rates, collateral valuations, and liquidation thresholds accurately.
RealT: Aave has collaborated with RealT, a platform that tokenizes real estate properties. Through this partnership, Aave users can use the tokenized real estate assets from RealT as collateral for borrowing on the platform. This in turn gives Aave users more options for providing collateral.
Centrifuge: Aave also has joined forces with Centrifuge, a decentralized finance platform, to bring real-world assets into the DeFi space. With this partnership, users can tokenize real-world assets via Centrifuge and deposit them as collateral on Aave.
Quantstamp: Quantstamp, a blockchain security firm, has partnered with Aave to conduct security audits and ensure the robustness of the Aave protocol. With this, Quantstamp reviews Aave’s smart contracts, identifies potential vulnerabilities, and helps maintain a secure platform for users.
Where to buy Aave
Aave is buyable on Bitvavo (Europe focussed), Bybit (Global focus) and Kucoin (Asian/Global focus)
Disclaimer
Please note that the information provided in this blog post is for informational purposes only and should not be considered as financial advice. The content presented is based on personal opinions and research, and it is recommended to conduct your own analysis and consult with a qualified financial advisor before making any investment decisions. Cryptocurrency investments carry inherent risks, and the author and website shall not be held responsible for any financial losses or damages incurred. Always exercise caution and make informed decisions when dealing with cryptocurrencies or any other financial assets. Lastly, please conduct your own research into the legality of crypto within your jurisdiction.