Origin of Aave
Aave tokens were created as a result of frustration! The creator Stani Kulechov experienced a lot of issues while lending his ETH tokens back in 2017 as there were no dedicated lending applications. He then created his lending application called ETHLend and later changed it to Aave which means “ghost” in Finnish.
How does the Aave liquidity pool work?
Initially, Aave used a peep-to-peer model to allow users to interact with other users via smart contract. This was inefficient because users have to wait for another user on the other side to interact with. To eliminate this wait time it was necessary to find a counterparty. Aave changed the model to proof-of-contract which is based on a contract with pooled funds that can be instantly used by the users of the protocol.
ICOs and Aave’s funding
In the ICO aka Initial Coin Offering of 2017, Aave token raised an amount of $16.2 Million which helped the team hire more developers to improve the token protocols through 2018. After two years of work, by 2020 DeFi Summer, the total value locked (TVL) was around $40M which dramatically increased with the launch of new DeFi protocols and new yield farming opportunities. By mid-January 2021, the TVL in Aave stood at $3B.
Aave is built on the open-source Ethereum blockchain as ERC-20 token as a decentralized finance protocol that allows people to lend and borrow crypto. With Aave, lenders deposit digital assets into specially created liquidity pools to earn interest while borrowers take loans using this liquidity with their crypto as collateral. Just like the government takes loans from the central bank with gold as collateral, Aave can be used to do the same in the future. Aave provides its holders with discounted fees and every owner has a say in the governance and future development of the token. This is done to make the protocol more decentralized. Aave was created even before DeFi existed and in the last year, it was one of the biggest projects where crypto assets were locked in the protocol. Not just ETH, users can lend and borrow about twenty-plus crypto products. Aave migrated from the ETHLend (LEND) to the present Aave (AAVE) token in the ratio of 100:1.
Aave’s newest update, V2, happened in December 2020 that brought a lot of new features and improvements to the protocol. The major changes were:
Debt Tokenization- In the Aave V2, borrowers are now allocated tokens that represent their debt. They can use these tokens to have more access to the liquidity pool.
Native Credit Delegation- This feature allows users access to liquidity without providing collateral. This is a very useful feature especially for the big financial institutions and crypto products’ exchanges to have great access to the Aave liquidity pool without any collateral.
Collateral Swap- As Aave liquidity pool has a collection of multiple crypto assets users can swap their collateral for any other available tokens.
Batch Flash Loans- As the name suggests, users can borrow multiple crypto assets at once in the same batch i.e same transaction address.
With the rise of the decentralized finance space, Aave has a great potential to grow mainly because of its interoperability with different blockchain protocols, especially with Ethereum. It is also worth mentioning that Aave has a great community and is increasing over time.
Aave’s current market value
Trading Price (at the time of writing) — $175.62
Global Market Cap (at the time of writing) — $2,359,162,302
Global Trading Volume (at the time of writing) — $182,764,146
Circulating supply — 13,433,292.70 AAVE
Maximum Supply — 16,000,000 AAVE
Where to trade Aave
To trade Aave at Unocoin, you can download the Unocoin application or sign up at www.unocoin.com. For every unique sign up during the first month of this new year, new users will get a welcome bonus of INR 100 worth of bitcoin.
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