Aave - Definition, Key Features, and How to Acquire AAVE Tokens



By Fevany



May 24, 2023

MAY 24, 2023


Last updated May 31, 2023

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What is AAVE?

Aave is a decentralized financial (DeFi) marketplace application based on the Ethereum blockchain. Aave has a number of similarities with the Compound platform, where users can deposit crypto assets to earn interest, or borrow crypto assets to invest or fulfill various needs.

Many people already understand that in the conventional financial ecosystem, financial institutions are required to perform lending and borrowing activities. With Aave, the process is automated using a collection of smart contracts on the Ethereum blockchain system.

Using these smart contracts, Aave is able to bridge the needs between lenders and loan recipients. The lender is able to earn interest on the type of asset it is not using. Meanwhile, the borrower needs the asset loan so that it can be used as investment capital.

Aave also has a governance token called AAVE. As a governance token, AAVE gives its owners the right to vote and participate in changes or innovations to the Aave protocol system.

In DeFi projects like Aave, the presence of a governance token is needed to distribute authority to its users. The goal is none other than to keep the platform or application decentralized


Key Features Offered by Aave


  • Earning Interest

In order to earn interest, the first thing that needs to be done is to deposit crypto assets. When depositing these assets, users will get aToken, a token that represents the nominal or amount of balance that the user has on the protocol and earns interest over time. If depositing USDT, the token received is aUSDT, if depositing YFI, the token received is aYFI, as well as other types of tokens.

The interest will be added to the user's aToken as soon as it becomes available. Users need to redeem the aToken in order to get back the capital and funds deposited previously along with the interest that has been earned in order to make a profit.

  •   Getting a Funding Loan

Not only does Aave earn interest, but users can also leverage and invest using borrowed funds as capital. Before applying for a loan, users must first deposit assets as collateral, and the amount of funds deposited must be higher than the amount of capital borrowed.

That is, if you want to apply for a crypto asset loan with a value of $100, the value of the deposited assets must be above $100. This aims to minimize the risk to the lender in the event of a decrease in the value of the crypto assets being loaned.

For example, you have 2 $ETH with a value of about $5000, and believe that the price will pump within the next month. Therefore, you want to buy more ETH through a loan at Aave. Using the 2 $ETH you already have, you plan to borrow 50% of the ETH coin's value.

A month later, it turns out that the price of ETH did increase by 25% and made the value of 1 $ETH to $3125. After that, you can return the previous $2500 ETH loan and withdraw the 2 $ETH that were used as collateral.


Aave developers

AAVE was created by Stani Kulechov in 2017 when he became interested in ETH blockchain technology. A few years later, in 2021, Aave officially cooperated with Polygon, a protocol that integrates blockchain networks compatible with Ethereum.

The cooperation step was taken to overcome the problem of high transaction fees and slow transaction speeds. Since Aave's launch on Polygon, the number of transactions on the platform has jumped by 50%, and the number of active wallet interactions with Aave's smart contracts has increased by almost 20%.


NFT-based Social Media Protocol (LENS) launched by AAVE

By utilizing NFT, Lens comes to make it easier for social media users to control all their content. For existing users, the experience of using the Lens Protocol will be similar to using traditional social media (old version)

Furthermore, Lens users are given the opportunity to make various "publications" such as posting or commenting. Lens users can also link to each other which is similar in concept to retweeting on Twitter.

"Although publication data will be stored on-chain, the protocol will also support IPFS hosting for off-chain storage of large files such as videos, music, and images"

Lens Protocol also confidently calls their innovation a composable and decentralized social graph that makes building Web3 social platforms easy.



Lenstube is a web3 social platform for video sharing and it is similar to YouTube. Lenstube utilizes decentralized web3 Technology that enables decentralized discovery, full data ownership, and new monetization models.
To access it, you must first connect a crypto wallet. There are many interesting videos here. In addition, you can also tip the content creators with $MATIC.


Orb Superapp

Orb is a user friendly super app for social media. You can create decentralized professional profiles and build on-chain credibility by connecting various NFTs and POAPs with your experience, education, skills, and projects.
You can also post your thoughts on-chain and connect with web3 people and build your community.


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