We want to introduce this crypto because the Aave financial system provides users with perks. Currently, it is difficult for users to distinguish between good decentralized finance (DeFi) projects and weak ones. The struggle over the project’s correctness or incorrectness has also worsened it. Producing new forks or similar sites has also made this condition worse. So, what should we do? Fortunately, there are many excellent and potential projects. Aave is one of these projects that you can consider investing in after evaluating and researching. This project has paid attention to the development of DeFi to make this market easy to use.
Aave Project Starting Point
Aave means ghost in Polish. This name corresponds to the aim of this crypto to create an open and transparent foundation in DeFi. The team behind this project comprises creative managers, software engineers, risk managers, and specialists in all fields. Two of the top-level managers, Stani Kulenchov and Lazaro Gustave, have participated in the team since the ETHLend project. As you will find in the following texts, ETHlend has had significant positive effects on the current Aave project.
What is Aave?
Aave platform is a decentralized finance platform that has facilitated the lending and borrowing of crypto assets by eliminating the need for a middleman. Users can take loans and pay crypto assets in return for interest.
This cryptocurrency is based on blockchain; it helps create a decentralized financial market and is special in the lending funds market. This financial market includes lenders, debtors, and liquidity providers. Liquidity providers and investors provide the liquidity of this market. Then the liquidity providers let the debtor receive funds according to the established mortgage system.
This method is the same one used in decentralized and peer-to-peer (P2P) lending used at the beginning of ERHLend protocol activity. This platform has provided users with the chance of borrowing through a transaction market. There is also a chance to create similar products to support this platform in this market. Currently, the Etherium platform has provided this possibility.
This company, providing the liquidity pools, lets users fund their cryptocurrencies and profit. After funding, the fund providers can act as lenders and gain profit at a ratio of 1:1 to the token they are lending. In this platform, peer to peer method replaces the liquidity pool.
Aave and its Token
The native cryptocurrency of this network is called LEND, which is known by its old name of ETHLend. This token is based on the ERC-20 standard of Etherium. This token has some perks, such as fewer transaction charges. Furthermore, these token holders can receive some part of the transaction charges in return for rewards for keeping the safety of the network.
This project was created in 2017 under the title of ETHLend, and in 2018 its name was rebranded to Aave. After that, the users swap their Lend tokens with Aave tokens to transform them to the new platform. This process took place at a ratio of 100:1. So, each user earned one Aave token per paying 100 LEND tokens.
Benefits and Features of Aave
Despite what we see in traditional systems, in this system, the process of lending and borrowing is transparent, and users can know about anything that happens during the process.
Because this platform has eliminated intermediaries, there is no need to submit KYC/AML (Anti-Money Laundering) measures.
Users on this platform can gain rewards without needing to own any cryptocurrency. So, users can experience risk-free trading.
Aims of this Platform
One of the main aims of this platform is to create an algorithmic lending market in which users can do two works. First, they can invest in pools to provide liquidity. In this way, they can lend to other users and profit from that.
Second, it provides a situation to provide loans according to the users’ needs and different markets. These two functions work easily. If you want to be a liquidity provider, you need to invest your money in the pools. In this way, you profit from any new loan paid by the system, which will result in the total profit made by your investment.
On the other hand, all you need to do is interact with the system if you want to borrow. In this step, you should collateralize loans—basically, you collateralize your cryptocurrency assets. After you pay back, the system refinances all your crypto assets. These are essential features of the platform aiming at a common and clear thing: offering a safe and decentralized loan platform.