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Aave. Features and Benefits

A Brief History of Aave

The Aave platform was created in 2017 by Finnish programmer and Master of Law Stani Kulechov. Even while studying at the University of Helsinki, he showed interest in blockchain technology and the Ethereum network, until one day he had the idea to create a decentralized crypto-lending platform. So on May 1, 2017, Kulechov created a company, calling it ETHLend, and launched a native token. Through the ICO, the company managed to raise $16.2 million.

In September 2018, ETHLend.io was rebranded, as a result of which the platform became known as Aave. Translated from Finnish, Aave means "ghost". A year later, the Aave V1 public testnet was launched, and in early 2020, the foundation network of the first version of Aave was launched on the Ethereum network. By the end of the year, the LEND token was migrated to AAVE at a ratio of 100 to 1, and the Aave V2 main network was launched.

Now, Aave is a DeFi protocol that allows you to borrow assets or lend coins online and without intermediaries using variable and stable interest rates.

Features of Aave

  • Open source lending protocol. This increases the level of trust in the platform. There is also a community whose job is to monitor the project to identify and fix the vulnerability.  
  • Multicurrency pools. 17 coins are supported to maximize earnings. The owners provide liquidity to any of these credit pools and make a profit. First, clients deposit funds. They can then withdraw assets from the pool through loans. The lender can move their earnings to a wallet or use them for trading.
  • Non-custodial service. The protocol is suitable for investors who are afraid of hacking. Only users have access to their wallets, and crypto assets are stored on external services.

Disadvantages of Aave

  • One of the main problems with a token is overcollateralization. Users must block crypto assets for an amount greater than the borrowed amount. This may not be effective for ordinary users in need of decentralized finance.
  • Low interest rates, which reduces the attractiveness in the eyes of potential investors who are looking for opportunities to earn money.