Disclaimer: I do not represent, nor get compensated by any of the companies or projects mentioned in this article. I do not recommend using any of the products mentioned here - please do your own due diligence before risking your hard-earned money. All opinions expressed herein are my own.
What is Aave?
Aave is a decentralized non-custodial money 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 overcollateralized (perpetually) or undercollateralized (one-block liquidity) fashion.
How does it work?
Aave allows you to lend your tokens to other users, or use them as collateral to borrow other tokens. When you deposit a token (let's say USDC) at Aave, you receive a corresponding Aave token (in our case aUSDC) in the same amount you deposited. The quantity of the token gradually grows, to reflect the interest rate you accumulated.
A simple, naive example would be: let's say Aave offers a 12% interest rate for USDC. You deposit 1000 USDC (directly from your wallet - aave works with most of them) and receive 1000 aUSDC. You can look at their dashboard and see fractions of cents being added - it's fun at first, but ultimately useless 😊. If the interest rate holds (interest rates change drastically daily, impacted by supply-demand for the token, market size, and number of transactions), at the end of the first month, you'd have 1010 aUSDC (12% / 12 = 1% monthly rate; 1% of 1000 = 10).
If you want your USDC back, you "withdraw" it from Aave - you "give" them 1010 aUSDC and "get" back 1100 USDC. Congrats - you made a $10 on a $1000 passive investment.
Again, this is very naive, as most of the time interest rates on stable coins are lower, and/or jump up or down multiple times a day.
But it's easy to understand that the value of Aave token is tied on a 1-1 ratio to the token they track: 1 USDC = 1 aUSDC, 1 DAI = 1 aDAI etc.
Tracking the value of Aave tokens
If you search CoinGecko, or EtherScan for aUSDC, you'll see its current value:
And here, for example, aTUSD (which is based on the TUSD token):
However, if you were to look for aUSDC on CoinMarketCap (as I did many times before), you'll currently see this:
Same for aTUSD:
What's going on?
Following the link in the call-out, leads to this explanation:
So Aave is not "meeting the minimum requirements" mentioned in section B1 (section B2 covers exchanges), which states:
Since I know for a fact, as an Aave user, that requirements 1-3 are fulfilled (they have a site, values can clearly be seen, and you can use other DEXes to get Aave tokens), I can only assume that CoinMarketCap couldn't get in touch with anyone from Aave?
Or maybe there's something more to that? Is this another CoinMarketCap policy shift designed by its Binance masters (see my previous article)?
I would love to hear your opinions. But as of now (and it might be fixed in the future), if you want to get the underlying value of Aave tokens, look in places other than CoinMarketCap.
Thanks for reading, and stay safe!