With the unprecedented growth of the decentralized finance (DeFi) industry, Aave (AAVE) network is becoming a market leader and occupies a prime position in the cryptocurrency lending and borrowing sector.
Continue reading to find out more Everything you need to know About AaveThis is the DeFi Protocol that’s most in demand, currently trading for $87 and has a market cap of more than $1.2 billion. Aave is a protocol that allows you to borrow or buy Aave tokens. We’ll discuss its benefits and drawbacks.
What is AAVE?
Step 1: Choose a Crypto Exchange
AAVE tokens can be purchased on several cryptocurrency exchanges. Visit the market page on CoinStats to view the exchange platforms supporting AAVE. Compare the exchanges’ security, user experience, fee structure, supported coins, etc., to choose the one that has the characteristics you need, such as affordable transaction fees, an intuitive platform, round-the-clock customer service, etc. You should also consider whether the exchange has been regulated by the Financial Industry Regulatory Authority, etc. and allows you purchase AAVE with your preferred payment method.
Step 2: Open an account
After you’ve chosen a cryptocurrency exchange that fulfills all your criteria, the following step is to register with the exchange using a valid email or mobile number. To verify your email, a link will be sent via email. Once the account is activated, you must create an elaborate password, and you’re good to go.
Some exchanges require KYC or AML verification. To be verified you will need to provide your personal information, such as:
- Full name
- Residence address
- Date of birth
- Photo ID document
You might need to take a photo or submit video to complete the verification process.
Once your identity verification is complete, it’s recommended to activate two-factor authentication (2FA) for an extra layer of security.
Step 3: Deposit the funds
Next, deposit money into your account. Numerous crypto exchanges allow you to deposit fiat currencies like USD and EUR. You can choose your deposit method (e-wallets or wire transfer), and then select the currency to be deposited. Tap on “Deposit Funds,” enter the amount you want to deposit, and click “Deposit.”Some deposit methods are extremely fast, while others, depending on the amount, require confirmation from authorities. Be sure to compare the fees for different deposit options as some may have higher fees than others.
Although linking your cryptocurrency account to your debit card is a great way to make instant purchases or recurring payments, it comes with a cost.
It’s usually free to make a bank transfer from your local bank accounts, but you should still double-check with your exchange.
An AAVE coin can be exchanged for another currency such as Ethereum, or for a stablecoin. The pairs of trading pairs are different between exchanges. To select one from the available pairs you need to search AAVE on spot market.
Step 4: Purchase AAVE
To instantly place an order for AAVE at current market prices, follow the steps:
- Click the search bar, enter AAVE, and select “Buy AAVE” or the equivalent.
- You can choose your payment method and the currency, then enter the AAVE value or fiat money to be used. Most exchanges will automatically convert the amount to show you how many AAVE tokens you’ll get.
- Double-check the transaction details and click “Confirm.”
- Once the transaction has been processed, you will see AAVE tokens in your account.
A limit order is a way to specify that AAVE should be purchased at or below a particular price. Your broker will ask you the number of coins you wish to acquire and the maximum price you’re ready to pay for each once you’ve placed an order. If your broker fulfils your order within the price range you have requested, your coins will be in your wallet. If the broker increases the price, the broker can cancel the order or keep it open. If you’re planning to keep your newly purchased coins for an extended period, we highly recommend securely storing them in a hardware wallet.
You can trade AAVE in spot markets by going to the Trade Page and searching for AAVE pairs (AAVE/USD, or AAVE/USDT). Check the price charts and select the trading pair. Click “Buy AAVE,” select the “Market,” enter your amount or choose what portion of your deposit you’d like to spend by clicking on the percentage buttons. Confirm and click “Buy AAVE.” Congratulations on adding AAVE tokens to your crypto portfolio!
Optional Step 5: Save AAVE
Your AAVE tokens may be kept in your brokerage wallet. Experts however recommend keeping your valuable coins out of exchange wallets as they could be vulnerable to theft and interference.
It is highly recommended that you create a private wallet using your personal keys. Based on your investment preferences, it might be possible to choose between hardware and software wallets.
Software wallets
If you’re looking to trade AAVE regularly, software or hot wallets provided by your selected crypto exchange will suit you. Software wallets’ strength lies in their versatility and ease-of-use. Software wallets allow for the most simple setup of crypto wallets and allows you to easily connect with various Decentralized Finance (DeFi), applications. However, these wallets are vulnerable to security leaks because they’re hosted online. If you wish to store your private keys in software wallets, do some research to ensure security. A platform offering 2-factor authentication is recommended as an added layer of security.
Among other software wallets, CoinStats Wallet is MetaMask and Coinbase Wallet. Trust Wallet is another example. Edge Wallet is also a type of software wallet.
Hardware wallets
Cold wallets, or hardware wallets, are generally considered to be the most secure way of keeping your cryptos safe. They offer offline storage which significantly lowers the chance of hackers stealing them. You can lock them with a pin, and they will wipe out all data after multiple failed attempts to prevent physical theft. You can also sign and verify transactions using a hardware wallet, which gives you extra protection from cyberattacks. They are best for those who have a lot of tokens and are experienced.
The most secure and reliable hardware wallets, Ledger Hardware wallets allow you to securely manage all your digital assets. The Nano X is designed for advanced users and offers more storage space and advanced features than Ledger Nano S, designed for crypto beginners.
A hardware wallet is more expensive than a hot wallet, with prices ranging between $50 – $200.
Trezor Model T and Ledger Nano X are examples of cold wallets.
Step 6 (Bonus Step),: Track AAVE tokens
You need to be aware that the cryptocurrency market is highly volatile and managing multiple investments can prove difficult. It is possible to keep your portfolio and your investments in crypto from one place by using a portfolio tracker. CoinStats offers one of the best crypto portfolio trackers in the market; you can find more information here.
CoinStats allows you to monitor profit, liquidity, and loss of AAVE on multiple exchanges.
CoinStats is compatible with over 250 cryptocurrency exchanges as well as over 7000 cryptocurrencies. The site offers advanced search capabilities, charting and analytical tools as well as up-to-date information. This allows you to link unlimited numbers of portfolios, including exchanges and wallets.
- Binance
- MetaMask
- Trust your wallet
- Coinbase
- Kraken
- Kucoin
- Bitstamp 500 and other.
To connect, go to the CoinStats Portfolio Tracker page and:
- Click on Add Portfolio to Connect Your Wallet.
- Select the wallet that you wish to link to, e.g. Ethereum Wallet.
- Enter the wallet address, and then press submit.
Place to Purchase Aave (Kraken recommendation)
You can find them here Aave can be purchased in many different ways.
Kraken’s lowest transaction fees are why it is highly recommended. Kraken has been rated as one of the safest and most trusted cryptocurrency exchanges.
These protocols have been rigorously tested to ensure maximum protection for your digital assets.
Follow the instructions in this chapter to purchase Aave with Kraken. Fiat currency can be used to fund your account.
CoinStats – How to Buy AAVE
CoinStats offers another way to purchase Aave. You only need to create an account at CoinStats. To log into your Coinbase account, or to create a brand new profile entirely, Look for Aave, and then click on Trade Aave. You can. Trade AaveOnce you have linked your CoinStats Profile to your Binance Smart Chain, your wallet will be available.
There is also the possibility of paying in fiat currency. However, it’s only available to US citizens.
Some Things To Consider when Trading Avive
Once you’ve completed your purchase, trading can be started immediately or you can keep the tokens. The market fluctuates and crypto value changes frequently, so you may be tempted to capitalize on the fluctuations.
Additionally, you can convert additional Aave tokens earned as profits into stablecoins like USD Coin or Tether. A few brokers even allow you convert Aave profits to fiat currency, such as Euros and US Dollars.
While trading, especially if you execute multiple trades per day, it’s important to choose a broker with relatively low transaction fees.
Due to crypto’s volatility, it is important to make use of stablecoins for collateral. You can lose your collateral if it drops below a certain threshold. This could lead to liquidation or additional fees.
There are exchanges where you can buy aave
You can find our complete list of crypto exchanges that allow you to purchase and sell Aave.
There are some things to consider when choosing an exchange to buy Aave
Here are some tips to help you choose among the cryptocurrency exchanges.
- Reputation is the most crucial factor. Exchange platforms are usually appreciated for their reputation, e.g., Binance.
- Liquidity: You should also consider liquidity – how easily Aave is converted into cash or other coins. Low price fluctuation will result in high liquidity.
- Transaction Fees: As discussed in the previous chapter, you should consider exchanges with low transaction fees, such as Kraken, to make profitable transactions.
- Wash trading: Avoid wash trading.
- User reviews: These are valuable resources for information on products and services. It is the same for cryptocurrency exchange platforms. Platforms with high ratings and positive customer reviews are a good option.
The Brief History of AAVE
Aave was founded by Stani Kulechov, a developer who launched Aave originally as ETHLend. The native token LEND was added to the initial coin offering (ICO). A total of $16.2 million was raised. ETHLend is a Crypto-backed peer–to-peer platform. It connects crypto lenders and borrowers. This makes it easy to borrow assets, and allows lenders to earn interest.
ETHLend was later rebranded and modified as Aave. The Aave Protocol officially launched on the Ethereum blockchain on 9 January 2020, offering instant-access ‘flash loans’ to users without the need for collateral.
Aave Protocol has been described as a “decentralized, open-source, and non-custodial money market protocol” where depositors can earn interest by providing liquidity to lending pools. The key difference was Aave’s algorithmic money market function versus ETHLend’s individually matching borrowers with suitable lenders. In Aave’s liquidity pool system, crypto loan assets are pooled together, and interest rates are determined algorithmically. In short supply assets will result in higher interest rates. Conversely, if assets have a large supply they are lower.
Aave has introduced new digital services and products, including Aave Pocket and Aave Lending(SaaS), Aave Gaming and Aave Custody.
How does AAVE work?
Aave is an open-source, no custodial lending program that allows for loans in many cryptocurrencies. Under the system’s requirement, lenders have to deposit their funds into liquidity pools, and borrowers can borrow from such liquidity pools. Borrowers must however deposit collateral equal to the amount that they borrowed in another cryptocurrency. The Aave protocol has an algorithm that automatically liquidates a borrower’s collateral if its value falls below a specified ratio to safeguard against volatility.
Aave allows you to take out uncollateralized loans. As Aave spokesperson explains: “Flash loans enable a customized smart contract to borrow assets from our reserve pools within one transaction on the condition that the liquidity is returned to the pool before the transaction ends. If this does not happen, the transaction is reversed to effectively undo the actions executed until that point, guaranteeing the safety of the funds in the reserve pool.”
Aave is audited and secured – each loan on the network is managed by a smart contract, verified by third-party auditors. Both borrowers and lenders can communicate with each other via the API or the smart contracts of the Ethereum network. Because of the trust between both parties, interest rates can be flexible and agreed to by them.
Tokens AAVE/aTokens
Aave’s AAVE token offers discounts on transaction fees to users who submit AAVE as collateral, while users who borrow AAVE are not charged a fee. AAVE token holders have governance rights to the Aave Network.
The second type of Aave protocol’s tokens is aToken. The Aave protocol allows users to earn interest in real-time because deposits are tokenized as aTokens, issued at a 1:1 ratio upon the deposit of assets into Aave’s liquidity pool. In addition to interest, aTokens are used for conversion back to assets when lenders withdraw their funds.
Conclusion
While there is a wide selection of cryptocurrencies out there, not all of them are profitable. Any cryptocurrency investment is fraught with risk.
Aave offers many benefits that should be taken into consideration when you are thinking of investing. One of its main advantages is:
- Aave allows clients to loan, lend and get interest without any intermediaries.
- It is extremely secure. The Safety Module protocol is used to prevent capital shortfalls. When there aren’t sufficient assets to pay back lender deposits, AAVE tokens saved in the safety module are sold to cover the deficit.
- Aave provides a variety of creative decentralized financial products including flash loans, rate switching and other innovative options.
- You can lend or borrow from a variety of cryptocurrency.
- Aave provides competitive rates
Governance is the main function of AAVE token. The AAVE token is used to vote for changes or whether new cryptocurrency should be introduced on the platform. You will need AAVE tokens (or stkAAVE, staked AAVE), to vote. A token is a representation of AAVE’s financial share.