What is Aave (AAVE)?

By Guarda Wallet | Guarda Wallet Blog | 25 Dec 2023

Aave is a decentralized finance (DeFi) protocol that continues to provide liquidity in the marketplace. This means users can still borrow and lend a variety of assets, including stablecoins, ether, and bitcoins tokenized on the Ethereum blockchain. By reducing the presence of traditional intermediaries in the banking sector, Aave remains a powerful tool for anyone needing money or wishing to earn a higher income when lending.

Who Created Aave?

The history of Aave began in June 2017 with the creation of the ETHLend platform by Stani Kulechov. Kulechov envisioned a decentralized custodial lending market based on Ethereum smart contracts, allowing users to earn money by issuing loans. This concept has evolved over the years, and in September 2018, ETHLend was rebranded to Aave, marking a transformation in its concept and a broader ambition to take the idea of loans to the next level by creating a large-scale platform for the use of liquidity pools.

How Does Aave Work?

Aave continues to utilize the smart contract technology of the Ethereum network. It directly connects cryptocurrency borrowers with lenders, eliminating the need for traditional financial intermediaries. Lenders can earn interest by lending their funds to others, and borrowers can easily take out loans using their crypto assets as collateral.

In 2023, Aave deployed its Version 3 (V3) on the Ethereum network and expanded to Metis Layer 2. This upgrade introduced a host of new features and optimizations, including High-Efficiency Mode, Supply and Borrow Caps, and Cross-Chain Portals, enhancing the platform's capital efficiency, security, and user experience.

What Is the Aave Token?

The AAVE token continues to provide users with various benefits such as reduced fees on the platform. AAVE remains a governance token, allowing users to vote on decisions affecting the future of the protocol. In addition, AAVE serves as a service token, granting users access to more credit and priority in making their cryptocurrencies available for lending.

The aToken, another crucial component of the Aave ecosystem, is used as a form of credit and is interchangeable with the AAVE token at a 1:1 ratio.

Is Aave a Good Investment?

Aave remains a leading protocol in the DeFi lending market, demonstrating robust governance and continuous development. Its ability to innovate and adapt to market needs keeps it relevant and potentially lucrative for investors interested in the DeFi space. However, as with any investment, potential users should conduct their research and consider market conditions before investing.

Is Aave Safe?

The open-source nature of Aave's credit protocol contributes to its security, with a community of maintainers working to identify and fix vulnerabilities. While no platform can guarantee absolute security, Aave's proactive approach to safety and risk mitigation makes it one of the more secure platforms for financial transactions.

Where to Store Aave?

As Aave lives on the Ethereum blockchain, Aave tokens can be stored in any wallet that supports the Ethereum ecosystem. Guarda Wallet (https://guarda.com/) continues to offer a secure, high-level solution with convenient functionality for storing, buying, and selling AAVE tokens. Get Guarda Wallet on all possible platforms, including Windows, Mac, Android, iOS, and browsers, to manage your AAVE tokens securely and efficiently.

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Guarda Wallet Blog
Guarda Wallet Blog

Guarda is a custody-free multi-platform cryptocurrency wallet with a user-friendly interface designed to store, buy, stake, and exchange crypto assets. https://guarda.com

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