What is Aave? (AAVE)
One of a number of emerging DeFi cryptocurrencies, Aave is a decentralized lending system that allows users to lend, borrow and earn interest on crypto assets, all without middlemen.
Running on the Ethereum blockchain, Aave instead is a system of smart contracts that enables these assets to be managed by a distributed network of computers running its software.
This means Aave users do not need to trust a particular institution or person to manage their funds. They need only trust that its code will execute as written.
Like other decentralized lending systems on Ethereum, Aave borrowers must post collateral before they can borrow. Further, they can only borrow up to the value of the collateral they post.
Borrowers receive funds in the form of a special token known as an aToken, which is pegged to the value of another asset. This token is then encoded so lenders receive interest on deposits
A borrower may post collateral in DAI, for example, and borrow in ETH. This allows a borrower to gain exposure to different cryptocurrencies without owning them outright.
Aave can also introduce additional features, such as instant loans, and other forms of issuing debt and credit that take advantage of the unique design properties of blockchains.
该公司最初名为ETHLend，于2017年通过首次代币发行(ICO) 筹集了1620万美元，在此期间，它出售了- 10亿单位的Aave加密货币 - 最初名为LEND。
ETHLend与Aave不同之处在于它不是汇集资金，而是试图以点对点的方式匹配贷款人和借款人。在2018年ETHLend更名为Aave，在芬兰语中意为“幽灵” 。之后ETHLend成为 Aave的子公司。
Aave is perhaps best described as a system of lending pools.
Participants deposit funds they wish to lend, which are then collected into a liquidity pool. Borrowers may then draw from those pools when they take out a loan. These tokens can be traded or transferred as a lender wishes.
To facilitate this activity, Aave issues two types of tokens: aTokens, issued to lenders so they can collect interest on deposits, and AAVE tokens, which are the native token of Aave.
The AAVE cryptocurrency offers holders several advantages. For instance, AAVE borrowers don’t get charged a fee if they take out loans denominated in the token. Also, borrowers who use AAVE as collateral get a discount on fees.
AAVE owners can further look at loans before they are released to the general public if they pay a fee in AAVE. Borrowers who post AAVE as collateral can also borrow slightly more.
The data firm Nomics has a more extensive list of AAVE's features.
Aave allows certain loans, called “flash loans,” to be instantly issued and settled. These loans require no upfront collateral and happen almost instantly.
Flash loans take advantage of a feature of all blockchains, which is that transactions are only finalized when a new bundle of transactions, known as a block, is accepted by the network.
Adding each new block takes time. On Bitcoin, that interval is roughly 10 minutes. On Ethereum, it’s 13 seconds. An Aave flash loan therefore takes place in that 13-second period.
The flash loan works like this: A borrower can request funds from Aave, but they must pay back those funds, and a 0.09% fee, within the same block. If the borrower doesn’t do this, the entire transaction is cancelled, so that no funds were ever borrowed.
As a result, Aave doesn’t take a risk and neither does the borrower.
A borrower may wish to use a flash loan to take advantage of trading opportunities or maximize profits from other systems built on Ethereum. It’s possible to swap different cryptocurrencies in an automatic way using flash loans to generate trading profits.
Note: Flash loans have been combined to execute attacks on lending systems built on Ethereum, sometimes successfully stealing hundreds of thousands of dollars worth of deposits.
Why does AAVE have value?
目前，Aave系统收取的 80% 的费用都用于燃烧AAVE。剩余的部分则用来支付贷款人。如果需求保持不变，AAVE的持续燃烧预计会减少其供应，从而 推高代币的价格。
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Why use AAVE?
AAVE may be of interest to traders or investors who believe decentralized lending will continue to grow in popularity.
As of July 2020, the Aave system is among the most active decentralized lending systems on Ethereum, having garnered $158 million in total deposits. Competing lending platforms include Compound and Maker, which have over $600 million in deposits.
You may also want to use AAVE if you wish to have a say over the rules that govern the Aave system, voting on how fees collected from lending are distributed to AAVE token holders.
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