Aave (AAVE) – what is the project, how does it work, what are the perspectives
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The Aave cryptocurrency (AAVE) was created for the field of decentralized lending. It allows you to lend cryptocurrency against interest and receive loans. There have already been projects in the industry that work in decentralized lending, but Aave has offered some cool features.
How the project works
Aave generates a fund from the investments made by the users of the platforms. From there, other users can receive loans. Each pool has a small pool of reserve assets to cushion volatility. It also allows depositors to withdraw money at any time without the risk of revoking the loan. Like other blockchain-based lending services, Aave requires collateral when taking out a loan. Also remember that the exchange NGO to AAVE today is not a problem.
The network offers many interesting features and loan formats. It works with many cryptocurrencies in which to lend or borrow. You can work with Dai [DAI], Ethereum [ETH], Attached [USDT], Packaged bitcoin [WBTC], and other Ethereum-based coins. Of all the “debt” protocols, Aave has the broadest functionality.
Aave allows you to get fast loans without any collateral (Flash Loans). Instead of guarantees, the project relies on speed of repayment. If a loan is disbursed and repaid in one lump, it is approved. If the loan is not paid off en bloc, it is not approved.
The project charges 0.3% for issuing a loan, giving it a constant flow of money. Flash Loans format allows safe arbitrage and the depositor does not risk his money. Only automated services that do instant cryptocurrency transactions take loans for such a short period of time.
Flexible interest rates
Usually, decentralized lending services set fixed interest rates. On Aave, you can choose the best rate between stable and variable. After the launch of this system in May 2020, the project experienced a significant influx of customers, “stable” prices were requested.
Variable rates are calculated by a special algorithm, taking into account the current market situation. The calculations are based on the provision of each specific cryptocurrency on the service. “Stable” rates – the average value of the rates for the last 30 days. The full history of their changes can be viewed when granting or receiving a loan.
In addition to the usual popular cryptocurrencies, the service allows you to pledge Uniswap and TokenSets. This will allow you to earn interest on holding these stacked cryptocurrencies and simultaneously receive loans at a lower interest rate than on stack. You can also earn interest from cryptocurrencies and AAVE at the same time when you lend to other users.
Some of the benefits include the following:
- Rate dynamics. Aave tokens are increasing in value and the capitalization of the network has increased over the life of the project. The developers also say they are seeing a growing user base as interest in decentralized finance increases.
- Crypto-fiat exchange pairs already include this currency.
- Anonymity. Aave clients do not have to go through KYC or other anti-money laundering or terrorist financing procedures to lend money or receive loans.
- The team. Project creator Stani Kuleshov has worked in the area of decentralized lending on other blockchain projects. He brought his experience to Aave and implemented features that the competition did not have.
So it is worth investing in Aave cryptocurrency.