Aave(AAVE)

Aave is a non-custodial liquidity pool-based DeFi (Decentralized Finance) protocol that allows people to easily borrow and lend crypto assets, without any middleman. While lenders/depositors provide liquidity to Aave's pool, thereby earning passive income, borrowers can borrow crypto assets against collateral, avoiding the need to sell their assets for liquidity. As it’s completely open-source, anyone can interact with Aave through smart contracts, APIs or a user interface client.

Launched initially by Stani Kulechov in 2017 as ETHLend on the Ethereum blockchain, Aave Protocol came as a rebrand with new features in January 2020, aiming to deliver a broader range of services. Currently, Aave Protocol is deployed on multiple blockchains including Ethereum, Polygon, Avalanche, Harmony and Optimism. 

As per Kulechov, Aave’s primary market consists of people who are already actively involved in the crypto community. Aave features among the top five protocols in terms of TVL, and a couple of Aave’s standout features are ‘Flash Loans’ that allow users to take crypto loans without pledging any collateral, and ‘Rate Switching’ which enables borrowers to easily switch between floating and fixed interest rates.

AAVE price

AAVE price stayed under $100 for most of 2020 and closed the year at a value of $88.5. Boosted by the crypto-wide positive market sentiment, AAVE coin broke out of $100 resistance on Jan. 4, 2021, for the first time ever. It maintained an upward trend thereafter and breached multiple resistance levels to reach $581 on Feb. 10, 2021. 

After that surge, the price of AAVE fluctuated within the range of $350 to $450 till May 2021, and registered an all-time high of $668 on May 18, amid 2021’s first major crypto bull run. This happened a month after Aave Protocol launched on the Polygon network. AAVE’s fully diluted valuation stood at $10+ billion at that price point. However, it couldn’t sustain the $600+ price for long and went into a corrective phase, receding to $170 around a month after posting its ATH. 

Backed by Aave Protocol’s continuous expansion and adoption efforts, AAVE coin made a comeback and returned to $400+ territory once again by mid-Aug 2021. By the end of the year, AAVE was trading in the vicinity of $250. It fell further and stayed within the price range of $100 - $250 during Q1, 2022. According to our AAVE live price chart, having tested $100 support multiple times, AAVE price eventually gave into the selling pressure and fell below $100 in Q2 2022.

How AAVE works

Aave Protocol works by bringing crypto borrowers and lenders on the same platform, to enable smooth lending and borrowing of funds, thus doing away with the need for any trusted middleman. Lenders deposit their crypto assets into a liquidity pool contract, to provide liquidity. They receive ‘aTokens’ in return which are pegged at a 1:1 ratio to the deposited tokens/coins. The pooled funds can be simultaneously loaned-out to borrowers, in the same contract, in exchange for collateral. There’s no need for individual matching of loans, as the entire process happens through pooled funds. Users can borrow and lend over 30 different cryptocurrencies, including DAI and ETH. 

AAVE, the native token of Aave Protocol, was created based on Ethereum’s ERC-20 token standard. It serves as a governance token that allows the Aave community to collectively decide the protocol’s future roadmap. AAVE holders can also deposit/stake their tokens into the protocol and earn rewards for their contribution to its security.

Aave Protocol is audited by some of the world’s leading security firms like Trail of Bits, Sigma Prime, Open Zeppelin, Certora, Peckshield and ABDK, thus ensuring the safety of the users’ funds.

AAVE news, updates and highlights

Aave has been making continuous improvements to its protocol ever since its launch. These developments have helped it make headlines more often than any of its competitors. In an important Aave news, in February 2022 the protocol successfully passed a cross-chain governance proposal, thus taking a major step toward blockchain interoperability, and multi-chain governance systems.

Aave also announced a new project called Lens Protocol the same month. It helps developers in building innovative social networking dApps (Decentralized Applications) on the Polygon blockchain.

Thereafter, in March 2022, Aave launched its version 3, called the v3 upgrade, thus making a significant improvement to its earlier liquidity pools model. Aave v3 came with the promise of bolstered security, greater decentralization, improved user-interface and efficiency.

Frequently asked questions about AAVE

• Can I stake my AAVE tokens?

Yes, you can stake your AAVE tokens to earn more AAVE as staking rewards.

• What are some of the best AAVE wallets?

Some of the wallets recommended on Aave’s official website are Ledger, Trust Wallet, Coinbase Wallet, Gnosis, Frame and Argent.

• What can you do with AAVE tokens?

You can use your AAVE tokens to vote on Aave Improvement Proposals (AIPs) and help shape the protocol’s future. AAVE tokens can also be staked for earning rewards.

• How can you buy AAVE cryptocurrency?

The recommended way to buy AAVE is from reputed crypto exchanges, with fiat currency, or in exchange for popular crypto coins like BTC, USDT and ETH.