Table of Contents
Aave is a crypto platform that enables users and participants to lend and borrow crypto directly from each other. In short, it’s a lending system in the crypto world that enables users to lend and borrow money while also earning interest.
The platform has its crypto tokens and is also a web3 version of more conventional finance lending and flash loan systems. If you’re interested in having the opportunity to lend out your crypto holdings and potentially increase your returns for doing so, read the blog carefully to have an in-depth understanding of Aave and how you can purchase AAVE Tokens.
What is Aave?
Aave is a Decentralized Finance (DeFi) protocol that lets people lend and borrow crypto without the need for any decentralized intermediaries. Users can earn interest by lending on the platform; and should pay interest on borrowing.
Based on the Ethereum blockchain, Aave is an open-source DeFi protocol with a smart contract framework. A distributed computer network, with the help of smart contracts, can manage all crypto assets. As a result, AAVE users are free to manage their funds independently of any single institution or person. Users can only rely on the smart contract code to function as intended.
Fun fact: “Aave” means Ghost in Finnish.
History of Aave
Aave first went public in September 2017 under the name ETHlend. Stani Kulechov, who at the time was not pleased with the fact that there were so few lending applications developed on Ethereum, created Aave.
The protocol was rebranded to Aave in September 2018.
In November 2017, AAVE held its initial coin offering (ICO), raising $16.2 million through the sale of one billion AAVE Tokens (then known as LEND) and an additional 300,000 for investors. With the conversion of 100 LEND into 1 AAVE coin in 2020, there are now 16 million AAVE coins in circulation.
How does Aave work?
The Aave protocol revolutionizes the lending process by introducing an algorithm that automates loans directly from Aave liquidity pools, eliminating the need for manual lender-borrower matching. Lenders can deposit their crypto holdings into these pools, earning interest based on the deposited and lent amounts.
Borrowers bear the responsibility of paying interest rates, which are determined by the utilization rate of the pools. In other words, interest rates hinge on the number of assets being utilized. Interest rates increase when all assets are in use to incentivize lenders to deposit more assets for borrowers. Conversely, if there are unused assets, interest rates decrease to attract borrowers and promote borrowing, establishing a symbiotic relationship between borrowers and lenders.
Aave loans operate on an over-collateralization principle, requiring users to deposit collateral worth more than the borrowed amount. Lenders have the right to claim the collateral if borrowers fail to return the borrowed assets within the specified timeframe. Recognizing the cryptocurrency market’s volatility, Aave implements a liquidation process if the collateral’s value falls below the predefined collateralization rate set by the protocol.
Moreover, Aave offers the unique feature of flash loans, allowing borrowers to access loans without providing collateral, provided they pay a one-block interest fee.
Aave Tokenomics
The name of the project’s token when it first debuted during the ETHLend time was LEND. At a token price of $0.016, Kulechov’s 2017 ICO brought in $16.2 million from investors. He made the decision to do a token swap later in 2020, greatly reducing the token’s supply.
Holders were able to exchange 100 LEND for 1 AAVE, reducing the token supply from 1.3 billion LEND to 13 million AAVE. The organization also chose to provide 3 million more tokens to the reserve for the Aave ecosystem.
The protocol underwent governance with the switch from LEND to AAVE. The community was given the opportunity to propose AIPs (AAVE Improvement Proposals) and guide the project’s development. As a result, governance became AAVE’s distinguishing feature and utility.
The initial distribution of AAVE took place as follows:
- 30% to the core development,
- 20% to the user experience development,
- 20% to the management and legal,
- 20% to promotions and marketing,
- 10% to the miscellaneous costs.
77% of the first supply of AAVE was distributed to investors, leaving 23% for the company’s founders.
How to buy AAVE Tokens in India?
Below are a few simple steps you can follow and buy the AAVE Token in India with WazirX, India’s most trusted and widely used Crypto exchange.
The best way to buy AAVE Tokens is using P2P trade. To get answers to all your queries related to the P2P trade, click here!
Bonus point: INR Deposits are also LIVE on the WazirX platform. Now, you can buy AAVE Tokens using INR.
Step 1 – Sign-Up on the WazirX platform
To begin buying and selling AAVE Crypto, you are required to create an account on the WazirX platform by signing up. Also, you can directly Log-in if you have an account already on the platform.
For your reference, here’s how you can open an account on WazirX.
Step 2 – Set up your account security by verifying your email address.
This step is about verifying your email address. After you sign up on the WazirX platform, you’ll get a verification link on your registered email. By clicking on that link, you’ll get two options to ensure the security of your account – the authenticator app and mobile SMS.
Note: The authenticator app is a more secure way to stay safe when compared to mobile SMS because there’s a risk of delayed reception or SIM card hacking.
Step 3 – Complete the KYC process.
After choosing your country, you can proceed with completing the KYC process. Click here for a detailed overview.
Note: You must complete your KYC to be able to trade P2P or withdraw funds on the WazirX app.
Step 4 – Add funds to your WazirX account using P2P.
After integrating your bank account into your WazirX account, you can buy USDT through P2P to the WazirX wallet. The USDT will act as funds to help you buy your favorite Cryptos.
Step 5 – Finally, buy AAVE on WazirX.
You can now easily purchase AAVE Tokens using P2P trade on the platform. Check the AAVE to INR rate from here and AAVE to USDT here.
After logging in to your WazirX account, you can choose USDT from the “Exchange” tab. You can also check all the price charts, order book data, and an order input form on the right side of the screen.
Click “Buy” after entering the amount and checking the total USDT amount to be paid.
Your order will be placed according to the price you have input. A seller willing to sell at a price will be notified, and then you can exchange the tokens using P2P.
It might take a few minutes for the order to be completed, but as soon as it is executed, you will receive the AAVE Coins you purchased in your WazirX wallet.
Happy Trading!
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
