WHAT IS AAVE
Aave is a decentralized cryptocurrency platform that allows users to borrow and lend crypto. Aave uses smart contracts to automate the process, with preset rules on how funds are distributed, how collateral is handled, and how fees are assessed.
Aave is an Ethereum-based protocol that offers automated crypto loans. Users can deposit cryptocurrency as collateral and borrow other cryptocurrencies, up to a certain percentage of the collateral value. This is known as the loan-to-value (LTV), and Aave limits the borrowed amount to 80% of the current value of the pledged collateral.
HISTORY OF AAVE
Aave is a for-profit company founded in 2017 by Stani Kulechov and based in Switzerland. Kulechov was trained in law in Helsinki and started Aave while still a student.
The firm originally named ETHLend, raised $16.2 million in an initial coin offering (ICO) in 2017 during which time it sold 1 billion units of its AAVE cryptocurrency originally named LEND.
The LEND cryptocurrency migrated to AAVE at a rate of 100 LEND tokens to 1 AAVE, dropping the total supply of its cryptocurrency to 18 million AAVE.
ETHLend was different from Aave in that, instead of pooling funds, it tried to match lenders and borrowers in a peer-to-peer fashion. In 2018 ETHLend was renamed Aave, which means “ghost” in Finnish. ETHLend became a subsidiary of Aave.
ADVANTAGES OF AAVE
A huge lending pool is available for various digital assets.
Offers more features for digital lending/borrowing.
Stable interest rates for some of the crypto assets.
Flash loans, a revolutionary feature of DeFi, are available that require no KYC.
DISADVANTAGES OF AAVE
Not as user-friendly as some of the alternatives.
A small list of supported e-wallets.
Lacks high incentives for users to lend or borrow.
Flash loans have been exploited by hackers in the past.
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