Aave is the Finnish word for ghost. Aave derives its name from its Finnish founder, Stani Kuchelov. Just like a ghost, Aave should be completely transparent and unavailable. In 2017, the platform was launched as part of an ICO under the name ETHLend.
Aave is a decentralized open-source and non-custodial protocol for creating money markets on Ethereum. On the platform, users can earn interest by providing credit pools with liquidity. In contrast, borrowers can obtain loans by using these pools with variable and stable interest rate options.
Many users also use Aave for flash loans. A flash loan must be completed within a single Ethereum transaction. When properly executed, any user can borrow liquidity from the Aave protocol without collateral. As long as the liquidity within a transaction is repaid in one block, the loan will be executed as planned.
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Aavenomics: Everything You Need to Know
In July 2020, Aave was already able to increase in price significantly. Total value locked exceeded the $500 million mark for the first time. The main driver was the release of Aavenomics — the new tokenomics concept. This proposed replacing a LEND token with a new AAVE governance token.
The main purpose of this new management proposal is to improve governance and make the Aave ecosystem more decentralized and secure. This should ensure several incentives and rewards for AAVE owners. It also includes a staking mechanism that rewards users who contribute to safety (safety mining).
Upgraded Aave Version 2
In addition, the Aave team has been working on a new version (Aave V2) for several months. The exact plans were published on August 14, 2020. The upgrade provides numerous new features and functionalities of the Aave protocol. The long-term goal of the new version is to make DeFi suitable for the masses and more interesting for institutions.
Aave also plans to integrate all types of tokenized assets. As part of a partnership, Aave and RealT are working to bring tokenized mortgages to Ethereum. These can then be secured with Aave to generate loans.
Future Aave Forecast
The development of Aave shows how quickly and dynamically the DeFi market is developing. The total value locked has increased sevenfold in just under three months. Aave has taken enormous steps on the way to mass suitability. This is an incentive for other DeFi platforms to follow suit, which they are sure to do. It remains exciting to see whether Aave can hold onto the top position.
According to Aave Marketing Manager, Isa Kivlighan, Aave will take further steps to make DeFi even more popular:
‘Our long-term mission is to popularize DeFi sector and make it easier to attract new users. The new Electronic Money Institution license is a great step towards this direction which helps to bring the Fin-Tech World and DeFi World closer together!’
What do you guys think about Aave? Feel free to share your thoughts in the comments!
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