Newbie Quest: Understanding Aave (AAVE)

Newbie Quest: Understanding Aave (AAVE)

By Steven_BA | Crypto-Newbie | 6 Feb 2021


A new post from the Top 100 crypto-currencies is live today. I will cover a very interesting coin. But before starting and telling you what it is about, I will start with a short story: few months ago, actually it was October 2020, I've heard for the first time about this new coin and the price was $0,52. Actually, at that moment I was talking to myself "let's give it a try. A few hundred EUROs invested shouldn't be a problem.". As usual, I forgot of my own thoughts so no investment had been made at that time. Now, the price of one single coin is $467,26 (yesterday it was even better, $549). Can you guess which one is it? It's more a rhetorical question, because you already saw it in the title :) but I'm telling you anyway...it's Aave (AAVE)

I had a moment on my own and analyzed a bit and I think that this top 100 crypto-currencies will not necessarily be in line with the reality of their positioning in the Market Rank, but rather will be a top of the currencies in which I believe they have value and prospects in the future. That doesn't mean that you have to follow me. I still recommend that you make your own decisions based on solid documentation and a well-developed education in the field of crypto. Many people invest and then live real dramas, lose money. Why? Because they were not informed enough. They listened to advice from neighbors, friends, acted emotionally and then things happen in an unpleasant way. So, if you don't know how to invest, you don't have time to study and analyze, turn to professional help, to people who know how do this properly.

So, as I was saying, today's post is about AAVE.

What is Aave?

First of all, I would like to tell you that in Finnish the word "aave" means ghost. AAVE is a decentralized financial platform. This means that human intervention and control is very limited, unlike the traditional platforms where there are big teams with people that lead and take decisions. Here, everything is pretty much digital. 

Aave is a decentralized finance protocol that allows people to lend and borrow crypto.

Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a flash loan using this liquidity.

Aave (which means “ghost” in Finnish) was originally known as ETHLend when it launched in November 2017, but the rebranding to Aave happened in September 2018. (This helps explain why this token’s ticker is so different from its name!)

AAVE provides holders with discounted fees on the platform, and it also serves as a governance token — giving owners a say in the future development of the protocol.

What is the AAVE platform?

On this platform, users can lend or borrow money. Those that lend money receive in exchange a nice commission and interest and those that borrow money pay to the others an annual interest. 

It is worth to mention that this project was created in November 2017 by Stani Kulechov. In 2018, the developers changed its initial name ETHLend to the actual name, Aave. 

Currently, AAVE is on the 15th place in the Market Rank, according to CoinMarketCap and CoinGecko. There is a high probability that in a short-time, this token will go up, on the 14th or 13th place. Personally, I really believe that AAVE will reach top 10 soon. 

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The price of AAVE is $464,65 at the time of writing this post. The Circulating Supply is 12.345.838 AAVE, which represents approximately 77% of the Max Supply, which is 16 million AAVE. It is a bit strange, but I believe that CoinMarketCap made an error, that the Total Supply is equal with the Max Supply, meaning that no more AAVE are available to be bought or mined. I've heard that there are still some more available.  

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Anyway, comparing AAVE with BTC, we will see some differences. Bitcoin currently has a Circulating Supply of 18.621.018 BTC from a Max Supply of 21 million BTC. AAVE will have with almost 5 million less coins as the Max Supply, which means that the AAVE price has a huge potential, if we are to compare it strictly speaking with Bitcoin. 

The Trading Volume registered in the last 24 hours is of $1.899.439.167, with 21,95% bigger than the last 24 hours. The Market Cap of the entire project is worth approximately $5.8 billion. 

Now, going to AAVE's official website, it looks like this:

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So, it is a platform where we basically have two options: "Deposit" and "Borrow". For example, if you have some DAI and you want to deposit or lend to other people, the deposit APY (Annual Percentage Yield) is 7,86% right now. For USDC is 7,33%, for USDT is 5,21%, for TUSD is 24,04$ and so on. You can check them above or just by accessing their official website. 

If you want to borrow some money, you will have two options: a variable APR or a stable APR. For DAI, the variable APR is 10,80% and the stable APR is 15,80%. You can check for the rest. What is amazing is that you can see the real value of the money that are on the crypto-market: $75,49 million DAI, $123,63 million USDC, $4,71 million TUSD and so on. 

As a conclusion, it is a very simple platform. If you have some money that you don't use right now, you can lend them using AAVE technology. I believe that this type of decentralized financial industry will grow very much in the future, because everything is so simple: lend or borrow money. 

Talking about stakeholders, you can see them below:

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Winklevoss Capital are famous because they are the twins who became billionaires from Bitcoin transactions. 

All of the stakeholders are huge crypto-companies that own AAVE. I am telling to myself that they would not do this business if they are not serious. 

Going back to AAVE numbers:

The All Time High has been recorded almost 19 hours ago, when its price was $534,41 and the All Time Low on the 5th of November 2020, when AAVE's value was incredibly small - $25,97.

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Personally, I believe that this project has quality, but the coin itself is less accessible, as long as many people would prefer to buy new coins with values around $0,01, $0,02 or a max of $1, $2 or $3. But I think that this project will have a very good outcome as a long-term investment. Moreover, I believe that the project is designed for those people that have money that don't use and don't have the courage to invest them. So, they can use their money and make profit, using AAVE.

If you have more questions or ambiguities, please feel free to engage with me in further discussions. 

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Steven_BA
Steven_BA

BA and MSc in International Relations. New to cryptocurrency. One of the best political analysis. Expert in terrorism, post-conflict states and state-building. Up-to-date to everyday political and foreign news.


Crypto-Newbie
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