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– TIMESTAMPS –
1:44 What is Aave?
3:48 Aave Platform Overview
5:04 Using Aave To Lend
7:30 Borrowing with Aave
9:08 Flash Loans
11:50 Liquidity Pool Token Lending
13:45 LEND Tokenomics
17:11 Credit Delegation
⛓️ 🔗 Useful Links 🔗 ⛓️
► Website: https://aave.com/
► GitHub: https://github.com/aave/aave-protocol
► Docs: https://docs.aave.com/developers/
► Aavenomics Announcement: https://medium.com/aave/strategic-investors-3-arrows-capital-framework-ventures-take-3m-position-in-lend-to-accelerate-916da9dbb1ca
📝 What is Aave? 📝
Aave is an open source DeFi lending protocol that allows users to earn interest on deposits and borrow a whole host of different cryptocurrencies. It was built on the Ethereum blockchain and is hence completely decentralised.
It was initially launched as Ethlend with an ICO back in 2017 but in 2018 they rebranded to Aave in order to take on their new form.
Today they offer support for lending of 17 different cryptocurrencies. They also offer flash loans, uncollateralized loans, “rate swithching” and other exotic features
📈️ How Aave Works 📈
When you supply tokens to lend out on Aave, they are replaced with aTokens. These can be viewed as similar to the cTokens that you have over at Compound finance. The only difference is that these are pegged to the value of the underlying token and your balance will increase as you earn interest.
You can withdraw the liquidity whenever you want and when that is done, your aDai tokens will be converted back into the Dai tokens. This deposit does not only earn interest but it also serves as collateral should I want to borrow any crypto.
🤝 Borrowing 🤝
When taking out a loan at Aave you can either lend at the variable rate or you can use what is called a “stable” rate. The latter acts like a fixed rate in the short to medium term. It can be rebalanced if there are severe changes in the market conditions
At Aave, the fixed rate is always higher than the floating (to account for risk). The exact rate that you will be charged depends on the utilization ratio in the pool.
When you are lending, you should take care about the liquidation levels. There is a 5% liquidation penalty that you will incur if you are liquidated.
⚡️ Flash Loans ⚡️
These are uncollateralized loans that can be taken out in an instant. Just as long as they are repaid within the same transaction, they are approved. If they are not repaid, then the whole transaction is void and no funds would ever have been originated.
Aave was one of the first platforms to offer flash loans. These allow users to better take part in the DeFi space with arbitrage between Dexs and refinancing loans from fixed to floating rates etc.
Flash loans have also been used with great effect in the ever popular practice of Yield farming.
👨💻️ Liquidity Pool Tokens 👨💻
Aave has opened up additional lending markets for Uniswaps liquidity tokens. This would allow users to lend or borrow these tokens. You no longer have to rely on their price appreciation in order to make some gains on LP tokens.
This is a relatively new addition which means that there is no one supplying these tokens currently. But one hopes that as LP tokens start gaining traction, more and more users will start to supply them over on this market.
🤖 LEND Tokenomics 🤖
LEND is an ERC20 token that was issued on the Ethereum blockchain. There is a total supply that is just shy of 1.3 billion whereas 1 billion of those were sold in the crowdsale.
The original purpose of the LEND token was to be a utility token. One that provided users with a number of benefits such as reduced fees, staking rewards and improved loan-to-value ratios.
In terms of the current tokenomics, 80% of the trading fees generated are used to purchase LEND tokens and burn them. This therefore means that the supply of LEND is decreasing daily the more fees that are generated. The remaining 20% is then used in order to incentivise more liquidity.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.
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