The open sourced Aave protocol is non-custodial and works with short-term flash loans that are compatible with a variety of other services. It allows users to borrow assets and earn interest on deposits. The AAVE coin is the proprietary governance token used on the Aave network.

This protocol network lets anyone deposit money to earn interest as well as borrow money through loans that offer both undercollateralized and overcollateralized options. AAVE is ranked #35 overall among cryptocurrencies, making it an oft-overlooked digital asset with a lot of potential. It is traded frequently with the US dollar (USD) and between other cryptocurrencies.

Aave is part of the Ethereum mainnet, which is where it launched from. The Aave coin is considered to be a decentralized finance coin, or DeFi. This means that no central banks are involved in determining the value or setting inflation for the currency. It is a digital only currency that is traded online and that can be stored in digital accounts guarded by password protection.

AAVE Breakdown

Ranked #35 out of thousands of cryptocurrencies, Aave has a market cap of $3.56 billion USD. Only 16,000,000 can exist in the marketplace at one time, of which 100% have already been produced. When the governance token AAVE launched, 23% of the coins were kept by the developers and founders of the Aave network and the rest were distributed to network users who held LEND tokens- the network’s previous currency.

Aave coins are backed by flash loans and interest earning, ensuring long-term support for the cryptocurrency. The currency is also helped by its predetermined rarity and made somewhat stable by the fact that no new AAVE can be mined.

Aave is not one of the fastest cryptocurrencies when it comes to processing time. 20 transactions can be processed over the course of five minutes. Its speed, however, is not considered one of the selling points for this digital asset. The decentralized and transparent lending network that the Aave coin stems form is what really makes it stand out. It was the first decentralized lending platform ever and has managed to exist as one of the top platforms of its kind since then, holding onto much of the market share in that niche.

AAVE Coin History

Aave Was known as ETHLend back in 2017 when it was simply a digital lending platform. After an ICO (Initial Coin Offering), the company raised $16.2 million and switched over to Aave tokens. All LEND tokens from the previous platform were able to be traded in for the new AAVE tokens at a rate of 1:100.

Aave became a parent company and hub for Aave Lending, ETHLend, Aave gaming, and more. The platform started to change from a decentralized P2P and became a pool based platform where lenders make cryptocurrency deposits and enter into a pool contract. This allows pooled funds to be lent by depositing collateral. The instant loans, then, have characteristics determined by how the pool is doing. This grew out of the founders’ desire to allow for more complicated financial transactions than simply trading between addresses.

AAVE Becomes More Useful

In an attempt to expand to a wider market and make their token more useful, AAVE developers made substantial changes to the Aave Protocol so that users could borrow assets and incur interest on their deposits. This significantly increased the liquidity of AAVE and set it up for a massive period of growth.

The 150x Spike

In November of 2020, analysts noticed a 150x increase in the AAVE rate. This occurred over a period of about four months, making it one of the best performing cryptocurrencies in that period. This significantly boosted the profile for the cryptocurrency, and it has managed to stay high since then due to significant lending activity.

AAVE Price Factors

Aave Is not considered as volatile as some of the higher-ranking cryptocurrencies. That's partly due to its usefulness on the Aave lending platform and it's limited worldwide supply. However, there are still some price factors that need to be taken into consideration by anyone who would like to invest in this cryptocurrency.

Availability

There are only a limited number of Aave coins that can be produced, all of which have already been created- a total of 166 million. This limits the availability of the coin and helps control the AAVE price.

Economic Factors

The Aave rate is certainly affected by changes in the global economy. It can also be seriously affected by changes in any of the major economies for countries where it is traded, including the United States, the UK, and China.

We have seen the AAVE price act bearish when covid lockdown protocols were put in place and the economy was severely stifled. We've also seen the AAVE rate improve as stimulus checks were sent out to businesses and citizens and as economies reopened when the covid pandemic started to ease.

Legislation

Some countries have completely outlawed cryptocurrency trading, making it impossible to buy or sell Aave there. Other countries are mulling over legislation related to cryptocurrency or have some legal restrictions already in place. You can watch the Aave chart closely to see how new legislation affects the price, and you can be certain that any major legal restrictions on cryptocurrency trading will hurt the Aave rate.

Trading Aave

Major cryptocurrency exchanges throughout the world allow the buying and selling of Aave. They permit users to store their Aave coins to be stored securely on their site and traded between other currencies. In some cases, the currency exchanges allow for Aave to be cashed out in a local fiat currency.

Because Aave is not backed by a central bank, it is subject to extremely volatile action. This is why it is so important that anyone interested in investing in this cryptocurrency make use of expert analysis and trading tools like those found on FX Leaders. Using the Aave chart and other analytical tools, potential investors can ensure that they are making smart moves and minimizing their risk of losing their Investments. They can get the help they need to determine when to act bearish or bullish on digital assets like Aave.

In order to trade Aave with success, you will need to have a firm grasp of the cryptocurrency market and the factors that affect value. You also need to watch for upcoming economic changes and changes to the Aave platform that can determine the value moving forward.

Since AAVE is so volatile, it's important that you watch the market closely for an opportunity to make a purchase, to cash out, or trade it for different cryptocurrency that may be performing better.