What is Aave (AAVE)?
Aave is a decentralized lending and borrowing platform. It was launched in January 2020 and allows users to lend, borrow and earn interest on crypto assets, all without the need for a centralized intermediary. When a user lends via the platform, they earn interest; and when they borrow, they pay interest.
Aave runs on the Ethereum, Polygon, and Avalanche blockchains, and functions as a system of smart contracts that enables assets to be managed by a distributed network of computers running the Aave software.
AAVE is the platform’s native token.
What are AAVE key features and how does it work?
Users can deposit digital assets into "lending pools," which become funds that the protocol can lend out. At present, there are more than 30 pools for Ethereum-based assets on the Aave platform, including stablecoins such as Tether, DAI, and USD Coin. As well as lending pools for other cryptocurrencies including ETH, BAT, and MANA.
Users who deposit tokens into a pool and provide liquidity, receive aTokens in return. For example, if you deposit ETH to the liquidity pool, you'll receive aETH in return.
Aave borrowers must provide collateral in order to borrow from the platform. They can also only borrow up to a certain percentage of the value of the collateral they provide. To account for the volatility of the crypto markets, the Aave protocol has an algorithm that automatically liquidates a borrower’s collateral if its value falls below a specified ratio.
Aave makes use of what it calls “health factor”, this is how safe a loan is. It is calculated as the proportion of collateral deposited vs the amount borrowed. A health factor above 1 is generally needed to avoid automatic liquidation.
Interest rates vary depending on what you're borrowing or how much liquidity a pool has that you are lending to.
What can Aave be used for?
As mentioned, the Aave platform is for borrowing and lending. As such investors can deposit their stablecoins in the platform to earn interest with much more attractive rates of return than traditional savings accounts. Likewise, borrowers can lend against collateral that they have deposited.
The Aave platform also allows “flash loans”. Flash loans are loans that are being borrowed and repaid within the same block. These are specific types of loans that are almost instantly issued and settled. These loans require no upfront collateral.
A borrower can request funds from Aave, but they must pay back those funds, and a small fee, within the same block. On the Ethereum network, this is within a 13 second period. If the borrower doesn’t do this, the entire transaction is canceled, so that no funds were ever borrowed.
Also, using the AAVE token on the blockchain comes with several advantages. This includes discounted transaction fees for users that submit AAVE as collateral, and users that borrow AAVE are not charged any fees. AAVE holders are also entitled to certain governance rights, this depends on the amount of AAVE held.
Where can you buy AAVE?
Aave is available to trade or buy on a number of different centralized and decentralized exchanges, including Binance and Huobi Global. For a full list of available exchanges see here.
AAVE is a decentralized finance (DeFi) platform based on Ethereum, offering various lending and borrowing services. Depositors on the AAVE platform can earn interest on deposited digital assets, with interest rates dynamically adjusted based on market supply and demand, providing users with a secure and efficient way to grow their assets. The AAVE token is the native cryptocurrency of the platform, used for participating in platform governance, paying interest, and obtaining collateral.
How to Buy AAVE
1. How to Buy AAVE on Exchanges
Step 1: Choose a reputable exchange platform
Select a trustworthy platform from numerous exchanges to make your purchase. Some trusted platforms include Coinbase, Binance, OKX, among others.
Step 2: Register an account
Create an account on the chosen exchange platform. You may need to provide personal information (such as phone number, email) to complete the registration process.
Step 3: Complete identity verification
For security reasons, some platforms may require you to undergo identity verification. Follow the platform's instructions, providing necessary identity information (such as country/ID number) and undergo facial recognition if prompted. Once your identity is confirmed, you'll receive notification.
Step 4: Link your bank or payment method
Link your bank account or other payment methods to the exchange platform for making payments when purchasing AAVE.
Step 5: Purchase AAVE
Find the option to buy coins on the exchange platform, select the C2C buying process, then input the amount of cryptocurrency you wish to purchase. Typically, you'll choose to buy USDT first and then proceed with the purchase method. Simply place your order, make payment to the seller, and you'll receive the cryptocurrency. Once the payment is completed, you can use your exchange assets to buy AAVE.
Step 6: Store your AAVE
After purchase, you can choose to store AAVE in the digital wallet provided by the exchange platform or transfer it to a hardware wallet under your control.
Step 7: Security Tips
To protect your exchange account and AAVE assets, it's essential to use strong passwords and enable two-factor authentication.
2. How to Buy AAVE via Over-the-Counter (OTC) Trading
Over-the-counter (OTC) AAVE trading occurs directly between buyers and sellers, bypassing exchanges or other intermediaries. Here are the general steps for OTC AAVE trading:
Step 1: Find an OTC trading channel
Start by finding a reliable OTC trading platform or service provider. These platforms typically offer online marketplaces or ways to connect with brokers for trading.
Step 2: Register an account
Sign up for an account on the chosen OTC trading platform. You may need to provide some personal information (phone/email) to complete the registration process.
Step 3: Complete identity verification
For security purposes, some platforms may require you to undergo identity verification. Follow the platform's instructions to provide necessary identity information (nationality/ID) and undergo facial recognition or other verification steps.
Step 4: Browse the trading list
After logging into your account, browse through the platform's trading list to find AAVE trades that interest you. You can choose trades based on the trader's reputation rating, trade volume, price, and payment methods.
Step 5: Select a trading partner
Once you find a suitable trade, click to enter the trading page and carefully review the trader's terms and conditions. Ensure you understand and agree to the trader's requirements, such as trade amount, payment method, trade time, etc.
Step 6: Negotiate trade details
After reaching an agreement with the trader, you can negotiate trade details such as trade amount, payment method, trade time, and location.
Step 7: Make payment
According to the agreement reached with the trader, use the chosen payment method to pay the AAVE purchase amount to the seller.
Step 8: Confirm receipt
Once the trader confirms receiving your payment, they will release AAVE to the AAVE address you provided. You can check your AAVE wallet balance after the trade to confirm its success.
3. How to Buy AAVE through Decentralized Exchanges (DEX)
Buying AAVE on decentralized exchanges (DEX) differs from purchasing other cryptocurrencies on centralized exchanges. Here are the general steps for buying AAVE on DEX:
Step 1: Choose a AAVE-supporting wallet
Create a new wallet supporting AAVE assets, then select a decentralized exchange that supports AAVE.
Step 2: Connect your wallet
Before using the DEX, you need to connect a wallet supporting the AAVE blockchain. You can connect your wallet to the selected DEX via browser extension or mobile application.
Step 3: Deposit funds
In your wallet, select deposit and choose the asset you want to deposit (such as stablecoins). Follow the wallet prompts to complete the deposit process.
Step 4: Find the trading pair
Search or browse for the AAVE trading pair on the DEX. Typically, you can find a search box or a list of trading pairs on the exchange's homepage or trading interface.
Step 5: Place an order
Once you find the AAVE trading pair, you can choose between market or limit orders and input the quantity you want to purchase. Ensure you input the correct price and quantity in the order, then confirm the order.
Step 6: Wait for the trade to execute
Your order will be submitted to the AAVE blockchain and wait for confirmation and execution by miners. Once the order is executed, you will receive the purchased AAVE, which you can view in your wallet balance.
Step 7: Withdraw funds
After completing the trade, you can choose to withdraw the purchased AAVE to your wallet for safer storage of your digital assets.
4. Official Channels for AAVE Project Team or Community
Sometimes, the AAVE project team or community may launch official channels for direct AAVE purchases. This may include private placements, presales, or other forms of direct sales.