Want to earn passive income? Of Course Yes!
There are 100 ways to earn passive income with ease. Among all, earning money with assets could be the best way for anyone.
Cryptocurrency is the popular way to earn passive income.
But how?
- Buy or trade crypto coins
- Mining currency
- Making cryptocurrency dividends
- Staking and a lot more
If you want to earn passive income with cryptocurrency, look no further than Aave. The crypto Aave is one of the good sources of investment. In this article, let’s discuss everything about Aave.
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What is Aave (AAVE)?
Aave’s protocol is shifting from a decentralized peer to peer lending strategy to a pool-based strategy.
Aave (AAVE) is an open-source Defi protocol. Crypto is also called a “decentralized lending system”. Aave allows users to “lend, borrow and earn” on the crypto assets.
No middlemen are involved.
Running on a cryptocurrency such as Ethereum blockchain, Aave instead is a system of effective smart contracts that allows these assets to be well-managed by a distributed ledger of computers operating its software.
This truly means that Aave (AAVE) users don’t need to worry about unauthorized access. Because no institute or middlemen is required to manage or process their funds. At its core, Aave’s software will create lending pools where the users can easily lend or borrow cryptocurrencies. Users can either lend or borrow 17 cryptocurrencies. Yes, you’ve heard it right! The popular cryptos include Ethereum, MANA and more.
Who created Aave (AAVE)?
Aave was founded by Stani Kulenchov in 2017. Stani was a developer who had been deeply investigating the potential for crypto Ethererum to improve the transitional financial system.
Originally, Aave (AAVE) was introduced as “ETHLend”, with the token called “LEND”. After the first token offering (ICO) has raised more than 16.2 million dollars. The idea behind the original version of Aave is to create a one-stop destination that connects both lenders and borrowers. On the other hand, matching the loan request with the particular offers or deals.
But things went wrong. The adverse financial situation has urged a reappraisal of the “ETHLend” concept in 2018. The financial condition has encouraged Stani Kulenchov to rebrand their project as “Aave” (AAVE).
Finally, ETHLend has been rebranded or relaunched as “Aave” in the year 2020. The core feature that was introduced by Stani was “Aave’s algorithmic money market function”.
What makes Aave (AAVE) unique?
It’s no secret that Aave (AAVE) token has multiple unique selling points than other cryptocurrencies. Yes, you’ve heard it right. When compared with other cryptocurrencies, Aave (AAVE) is growing its popularity day by day.
During the decentralized finance (DeFi) huge craze in 2020, AAVE was a popular project in terms of the complete value of crypto secured in its protocol.
The project AAVE allows users to lend and borrow in about 17 cryptocurrencies. This means users have a wider range of options to choose from. Among several features, AAVE’s flagship i.e “Flash Loan”, has become more popular. This has been charged as the original uncollateralized loan option in the space of DeFi. Keep a note, users need to pay back within a similar transaction.
Let’s have a look at another selling point of AAVE. It is the user’s who are borrowing through AAVE. They can fluctuate between either “fixed rate” and “variable interest rate”. Fixed-rate, as the name, suggests the price is fixed. At the time of volatility, the cost will be provided. The fixed price may vary from time to time. The variable rate is mentioned according to the borrower’s choice. The borrower may set the price.
This could be another unique feature of Aave.
How many Aave (AAVE) coins are there?
Now, let’s have a look at Aave coins that exist in circulation.
The circulation is directly linked to the complete value that is locked on the Aave (AAVE), as the coins are burned whenever the protocol will collect charges.
The initial Aave coin offering existed in Nov 2017. At that time, 16.2 million dollars was raised by trading 1 billion coins. During the origin, 23% of Aave (AAVE) tokens are assigned to the founder – Stani Kulenchov.
Aave coins have been designed according to the ERC-20 standard. It is said that Aave tokens are built to be deflationary. At the time of DeFi protocol shortfall, stacked coins are used as a security as the final resort.
Aave revealed the plans to maintain Aave token swap in July 2020. Simply put, 1.3 billion coins in circulation can be swapped for the recently minted Aave (AAVE) at a 1:100 ratio, creating 16 million Aave tokens in circulation.
How does the Aave (AAVE) work?
Aave (AAVE) is the native or primary token to the lending protocol. When the founder ETHlend was reintroduced to Aave in the year 2018, the primary token was named “LEND”. The LEND was finally migrated to AAVE in the year 2020. As mentioned above, there are 16 million AAVE tokens in circulation.
AAVE’s native use case is the governance of the Aave (AAVE) protocol. Governance will ensure the decentralized control of the AAVE platform. Sounds amazing right!!! Yes, it provides holders with an excellent opportunity or chance to vote on items. The items include management of the platform, allocating the funds, development of proposals and more.
Now let’s have a look at staking in Aave (AAVE).
Apart from governance, Aave (AAVE) tokens will be staked on the platform as well. Aave (AAVE) holders can lend the tokens to the liquidity pool. Here, the liquidity pool is called a safety module. The safety module in the Aave protocol will cover lenders during a capital shortage. In the case of requirement, the tokens in the safety modules can be exchanged or sold for the asset that is required to pay out the lenders. The lenders of Aave (AAVE) will receive protocol fees, rewards and more.
Conclusion
Aave is the decentralized money or value market running on the “Ethereum” blockchain. Aave enables users to both lend and borrows a series of assets. Aave was launched by Stani Kulechov. At initially, Stani introduced “ETHLend” in 2017. Later upgraded and reintroduced ETHLend as Aave in 2020. Aave (AAVE) protocol is designed on Ethereum, this is the blockchain that is performing the transition (Proof-of-Work – Proof-of-Stake).
