Contents

• Who created Aave?
• What is AAVE used for?
• How does Aave work?
• Should you buy Aave now?
• FAQS

Who created Aave?

Aave was founded by Stani Kulechov who, during his time studying law at the University of Helsinki, became interested in Ethereum and the ways that it could disrupt traditional finance. In 2017, he released the decentralized application (dapp) ETHLend, raising $16.2 million in an initial coin offering (ICO) for its LEND token. ETHLend allowed users to post loan requests and offers, acting more as a community tool than the automated service that exists today.

ETHLend overhauled its product and rebranded to Aave in 2020, migrating from the LEND token to AAVE in the process. As part of the migration, AAVE were redeemable at a rate of 100 LEND per 1 token.

Since then, the team raised over $32 million from some of the top VCs in the blockchain space, including Blockchain Capital and Standard Crypto.

What does Aave mean?

Aave means “ghost” in Finnish and has become known as the protocol’s mascot. The ghost icon is also often seen on twitter bios by those who work on the protocol.

What is AAVE used for?

While traditional banks rely on credit and background checks to determine loan approvals and amounts for their clients, Aave places funds in the hands of smart contracts, meaning that all transactions are automatically pushed through by the platform’s code.

When lenders deposit crypto into the protocol, it gets sent to a “liquidity pool” which is then used to fill its borrower’s requests. If you’re unfamiliar, a liquidity pool is a bucket of cryptocurrencies locked in a smart contract used to facilitate the exchange of tokens. Thus, lenders deposit crypto into the pools and borrowers borrow crypto from them.

The AAVE token can be staked on the platform for interest and used for governance of its Decentralized Autonomous Organization (DAO). It also provides users with perks such as lower fees on the platform.

The platform is unique in that it originated the use of “flash loans,” uncollateralized loans that need to be paid back within one block transaction. These can be used when a user finds an opportunity to buy a token, immediately sell it for a profit, and return the borrowed funds.

Aave is a distributed, open source DeFi protocol that also has its own ID, AAVE. Account owners can vote on Aave development and thus influence the direction of the protocol through their actions. In addition to this, Aave also has a betting function, where the owners of AAVE accounts can choose to lock their AAVE account in the service. At this point, it is good to remember that stacking your AAVE is a different matter from the loan service mentioned earlier in the text, where it is possible to get an annual interest rate on your deposit. Aave staking is a protocol security mechanism that prevents liquidity problems and protects the funds of service depositors in the event of a sudden market disruption. By stacking the AAVE, it is also possible to earn interest income in exchange for tokens deposited in the service. Of course, interest is also paid on AAVE codes.

The Aave does not have its own blockchain, and the protocol works like most other DeFi protocols on top of the Ethereum block chain. It currently supports several cryptocurrencies built on top of the Ethereum blockchain, and the range of services is constantly growing. Something about Aave’s popularity says it’s one of the world’s most significant DeFi protocols in terms of the amount of wealth locked into its protocol.

How does Aave work?

Different DeFi protocols allow for an open market that works much more efficiently than the traditional banking system. DeFi brings the services familiar from traditional banks from existing centralized systems to completely new decentralized systems. The advantages of Aave and other DeFi protocols over current centralized networks are undeniable. One essential feature that distinguishes Aave from centralized systems is transparency. Aave operates in an open block chain, so the operation of Aave is completely transparent. Users of the protocol and those investing in the AAVE logo know the current development of the project.

It is a fully decentralized system and the service itself does not manage the cryptographic currencies stored by the users. Thus, users of the protocol always own the encryption currencies stored in the service. Ownership of the logo will not pass to Aave at any stage of the process. Aave differs much in its policy from traditional centralized financial service providers.

Aave is a decentralized peer-to-peer loan service, so it is the responsibility of service users to provide the liquidity provided by the loans. Aave users can earn interest income from the funds they store in the service. Aave gives depositors an amount of their own interest-bearing aTokenesis (Aaveinterest-bearing token) equal to the deposit. Aave aTokens are created upon deposit and destroyed upon redemption of the deposit. For example, if you want to store Chainlink LINK characters in the protocol, you get the Aave aLINK in return.

Aave aTokens allows user deposits to be locked to the protocol. Aave aTokens interest income collected by the tokens allows you to withdraw more funds from the service than you saved when you redeemed the deposit. Upon redemption of the deposit, the tokens will be exchanged back for the currency that was originally deposited in the minutes.

In addition to providing liquidity, it is also possible to borrow from the Aave protocol. Aave offers a fully automated lending service where anyone can borrow cryptocurrencies without the cumbersome and time-consuming processes known to traditional banks. The most significant advantage of Aave loan service is that it is possible to obtain liquidity by using the service without selling cryptocurrencies.

In practice, borrowing always requires insurance, ie the collateral must be significantly higher than the loan amount. The more significant the difference between the collateral amount and the loan amount, the better the loan is protected from the borrower’s perspective. It is known that the exchange rates of cryptocurrencies can change very quickly. A sudden and sharp fall in the exchange rate can lead to a situation where the protocol automatically sells part of the deposited collateral to reduce the total amount of the loan.

It offers its users one of the broadest interest rates for DeFi services. Cryptographic foreign currency loans can take advantage of a variety of interest rate options ranging from fixed interest rates to variable interest rates. A wide range of different interest rates ensures that everyone can find the interest rate they want. Users can also switch between different interest rates as needed.

Staking

Users can stake their tokens through the protocol’s dapp to help ensure the safety of the protocol. Staked AAVE is deposited into the Safety Module, a smart contract meant to cover a Shortfall Event (liquidity deficit) within the platform. This type of complication could arise from a smart contract issue, the failure of a collateralized asset, or the malfunction of the Oracle system that the platform uses to determine the pricing of its assets.

In return, stakers receive stkAAVE equal to their staked position, a token that can be used in other dapps and accrues rewards in AAVE. If they wish to unstake their funds, they can only do so after the seven day cooling period from when they start staking.

Flash Loans

Aave is the first DeFi lending protocol to provide flash loans, a system where users can loan funds and repay them, along with a 0.09% fee, within the same block. Flash loans are automatically reversed if they are not paid back within the same block and are thus not recorded in that block’s ledger.

Flash loans are useful in arbitrage situations, for example, allowing users to benefit from the variability of interest rates across platforms and take a large loan of uncollateralized capital with which to make an instant trade.

Of note, no collateral is required for flash loans.

Should you buy Aave now?

Aave (AAVE) remains to be one of the highest tokens based on TVL. Although not as fast-growing as its 2021 performance, its growth has established it as one of the good tokens to hold until it overcomes its current bearish trend.

How to Buy AAVE Token on Zipmex?

To purchase Aave tokens on Zipmex, install the Zipmex application and follow the procedure below.

Register and verify your account through KYC.

Sign up to get started

If you already have an account, make sure to deposit funds to the Trade Wallet to be able to buy crypto assets.

Go to the Trade menu at the bottom of the application on your Zipmex account. Then select “Buy Assets.”

Choose the trading pair. You can choose AAVE/USD AAVE/USCD or local currencies.

Select the transaction method you want. For transactions using real-time prices, can choose “Market Order”. For the transaction method at the price you set yourself, choose “Limit Order”.

Enter the nominal price or the amount of the asset you want to buy or sell. Don’t forget to check whether all information, such as nominal and transaction methods, is correct.

Click “Confirm.” Zipmex will process the buying of Aave tokens immediately. The results of the transaction will automatically go to your Trade Wallet.

Now that you’ve learned everything you need to know about AAVE price prediction, buy AAVE on Zipmex Exchange now and don’t miss out!

FAQS

What is Aave?

Aave is a decentralised non-custodial liquidity market protocol where users can participate as depositors or borrowers. Depositors provide liquidity to the market to earn a passive income, while borrowers are able to borrow in an overcollateralised (perpetually) or undercollateralised (one-block liquidity) fashion.

Please join the Aave community Discord server; the Aave team and members of the community look forward to helping you understand and use Aave.

Why Aave?

Aave Protocol has been audited and secured. The protocol is completely open source, which allows anyone to interact with a user interface client, API or directly with the smart contracts on the Ethereum network. Being open source means that you are able to build any third-party service or application to interact with the protocol and enrich your product.

How do I interact with Aave protocol?

In order to interact with Aave protocol, you simply deposit your preferred asset and amount. After depositing, you will earn passive income based on the market borrowing demand. Additionally, depositing assets allows you to borrow by using your deposited assets as a collateral. Any interest you earn by depositing funds helps offset the interest rate you accumulate by borrowing.

What is the cost of interacting with Aave protocol?

Interacting with the protocol requires transactions and so transaction fees for Ethereum Blockchain usage, which depend on the network status and transaction complexity.

Where are my deposited funds stored?

Your funds are allocated in a smart contract. The code of the smart contract is public, open source, formally verified and audited by third party auditors. You can withdraw your funds from the pool on-demand or export a tokenised (aTokens) version of your lender position. aTokens can be moved and traded as any other cryptographic asset on Ethereum.

Address Screening

Why is my wallet blocked?

We receive blockchain intelligence provided by TRM Labs. TRM combines on-chain data and real-world investigations to identify financial crime and other prohibited activities. This data blocks wallets from app.aave.com that are associated with certain legally prohibited conduct.

If you believe your address has been incorrectly flagged, please contact help@aave.com.

What information is shared with TRM Labs?

Your address is shared with TRM, but no metadata is tracked or shared. The request from the UI is routed to the Aave hosted API, which is used as a proxy endpoint, and the address is passed directly through to the TRM service. Users’ IP addresses are not shared with TRM.

Is there any risk?

No platform can be considered entirely risk free. The risks related to the Aave platform are the smart contract risk (risk of a bug within the protocol code) and liquidation risk (risk on the collateral liquidation process). Every possible step has been taken to minimise the risk as much as possible– the protocol code is public and open source and it has been audited. Additionally, there is an ongoing bug bounty campaign live and running. You can find additional risk and security related information in the risk framework and security and audits sections.