What Is Aave ?
Aave is a decentralised finance (DeFi) cryptocurrency lending platform. This platform allows Cryptocurrency holders to borrow or lend their Crypto and earn interest on the Crypto that they lend. Aave is the Finnish word for ghost.
Stani Kulechov is the founder and CEO of Aave. Aave started out life as Ethlend, when the original cryptocurrency was launched via an ICO (Initial Coin Offering) back in November 2017. Unfortunately, when the last crypto bear market started in early 2018, this caused Ethlend to lose credibility as there was a drop in both interest and liquidity on the Ethlend platform. The decline of Ethlend prompted Kulechov and his team to develop Aave.
What is Aave & How Does Aave Work?
In traditional financial markets loans work by matching an individual lender with an individual borrower. Aave is different, in that the lending platform matches loans from a pool of lenders using an algorithm rather than a person.
The interest rates on Aave are dictated by the availability of assets in each of the lending pools. If almost all of the funds in a pool are being utilised, the interest rates will increase to encourage more Cryptocurrency holders to deposit. On the other side, if there is a lack of assets in a particular pool the interest rates will be low to encourage borrowing.
Aave is so successful as a lending platform that as of the 1st May 2021, it boasted a total of over $14 billion worth of liquidity:
Using the Aave platform is straightforward and can be done using these simple steps:
- Download the Ethereum based Metamask web wallet extension on Google Chrome, alternatively you can choose an alternative web or hardware wallet such as Ledger.
- Choose the amount that you would like to deposit in Ethereum or your preferred/compatible ERC-20 on to the Aave platform.
- If you are happy with the amount that you would like to deposit click approve.
- Approve the Ethereum Gas fee.
- If you would like to check the status of your deposit view it on Etherscan.io.
- Once the deposit transaction is complete you will see your balance using the Aave dashboard.
As you can see from the screenshot below, there are different APR interest rates available depending if you are lending or borrowing:
As mentioned before your deposited funds can also be used as collateral to borrow any cryptocurrency listed on the Aave platform.
Aave is incredibly popular and is currently (2nd May 2021), ranked as the 28th most valuable by market capitalisation. At the time of writing the market cap of Aave is $6,002,449,406. The total supply of Aave tokens is relatively low at just 16 million and the price per Aave is $480.44.
Where Can You Buy Aave?
Due to its popularity and value Aave is available at many of the best cryptocurrency exchanges:
Most of the exchange applications are simple and fast, making purchasing your first Aave easy.
If you enjoyed our What Is Aave Guide and are now interested in investing in Aave, have a look at our Best Crypto Exchanges page for more information.