Aave (AAVE) 101: Discover the Decentralized Finance Protocol

Aave (AAVE) is a project that stands out as an alternative to traditional finance with a mission to provide a decentralized finance (DeFi) platform. It has become quite popular, and in this article titled “Aave (AAVE) 101: Discover the Decentralized Finance Protocol,” we will delve into the Aave (AAVE) project in detail, covering topics that are of interest to Zatrun.com readers.

What is Aave (AAVE)?

Aave (AAVE) is a decentralized finance (DeFi) protocol that allows users to borrow and lend cryptocurrency, as well as create applications. The protocol offers users the opportunity to lend money to each other in a decentralized, non-intermediated way with fixed interest rates. AAVE Coin is the native token of the Aave protocol, which is used as a governance weight center and is a stakeable cryptocurrency.

Aave operates as an international lending institution where users can borrow money at fixed interest rates without being affected by varying interest rates between countries. To achieve this goal, developers have created a decentralized liquidity pool protocol that is similar to traditional finance.

In Aave, users are divided into lenders and borrowers. Lenders can earn interest by depositing their digital assets into private liquidity pools. Borrowers can obtain flash loans by using this liquidity and offering their crypto assets as collateral. Borrowers can borrow money in two different ways in Aave: overcollateralized (continuous) or undercollateralized (single-block liquidity). The platform is completely open-source and allows lending with all ERC-20-based cryptocurrencies. Users can interact with the platform using any user interface client, API, or smart contracts on the Ethereum network.

What Are the Unique Features of the Aave Project?

Aave (AAVE) emerged as one of the rising stars among the DeFi projects in 2020 with the increasing popularity of DeFi. The project drew attention by offering unique earning and borrowing options with fixed interest rates, and ranked among the top DeFi protocols in terms of total locked assets in 2020. Here are the unique features that set Aave protocol apart from its competitors, which offer lending and borrowing opportunities with ERC-20 based cryptocurrencies:

The uncollateralized loan option, known as “Flash Loan,” is the first uncollateralized loan offered in the DeFi space. The interest rates are fixed and determined independently of any country or other authority’s economic decisions. Additionally, it can be used on many markets such as ETH, AVAX, Optimism, Fantom, Polygon, Arbitrum, Aave Arc, and AMM. It is governed by Aave DAO and created by over 100,000 token holders. It is audited and undergoes security checks by leading security firms such as Certora, ABDK, SigmaPrime, OpenZeppelin, Trail of Bits, and PeckShield. It has an organization called Aave Risk DAO that manages any protocol risks. It has a treasury to pay those who want to withdraw their collateral.

How to Buy AAVE Coin?

Aave Coin is currently traded on exchanges such as Binance, KuCoin, Coinbase, FTX, etc. You can choose any exchange you prefer to buy AAVE Coin. You can easily buy AAVE Coin by following these steps:

First, access the web or mobile application of an exchange that lists AAVE Coin. Then, complete the account opening process. Follow the identity verification and approval process and complete the deposit transactions. Finally, create a purchase order for the desired balance amount of AAVE Coin and store it in your secure accounts.

When buying Aave Coin, it is important to pay attention to several points regarding security and user experience. When choosing an exchange, it may be useful to prefer reliable and reputable exchanges and evaluate factors such as ease of use, trading volume, and transaction fees of the exchange.