Are you looking for a way to earn interest on your crypto savings or borrow against your assets? That’s what the Ethereum-based AAVE platform is all about.
In this article we’re going to do a brief overview of AAVE and what you can do with it. We’re also going to walk you through how to get started using it. Lastly, we’ll go over some of the behind the scenes technical details of the platform including the risks you’ll need to consider before signing up.
What is AAVE?
AAVE is an open-source DeFi platform that allows users to earn interest on deposits and borrow against them. There are no KYC checks, geographic restrictions or other limitations on who can join. Currently, the platform boasts of having over $3 billion in deposits.
One important difference with AAVE and other competitors is that this platform is non-custodial. In short, that means your deposits are always in your control. This is good because it means no single person or corporation can restrict your access to your deposits.
If the Swiss company behind AAVE were to disappear tomorrow, your funds would still be available. Non-custodial platforms do have some downsides though. If your funds are lost for any reason, AAVE can’t help you recover them. If there is a successful hack and funds are stolen, non-custodial platforms typically don’t have insurance. AAVE does offer a sort of pseudo insurance which we will get to later.
AAVE is built on Ethereum. That means it’s based on one of the most battle-proven crypto networks out there. However, the platform currently only supports a handful of ERC-20 tokens for earning interest and borrowing against.
That means popular non-Ethereum assets like Litecoin and XMR aren’t supported. AAVE supports most ERC-20 stablecoins (USDT, USDC, TUSD, DAI to name a few) as well as several other popular Ethereum-based tokens such as Basic Attention Token or BAT, 0x Coin or ZRX, and Maker or MKR. The platform even indirectly supports bitcoin via the Ethereum-based Wrapped Bitcoin or WBTC.
Making Your First Deposit With AAVE
Getting started with AAVE is pretty simple, but could be a little daunting if you are new to crypto apps. To begin, visit AAVE’s official website – AAVE.com. Next, click on Enter app which will bring you to a version select screen. Unless you have a reason to, go ahead and choose the latest version. At publishing time, the latest is version 2.
Next, you can decide whether you’d like to associate a wallet so you can deposit and withdraw through it, or you can continue without associating a specific wallet. Currently, AAVE supports browser wallets like MetaMask, hardware wallets like the Ledger, and even popular custodial wallets like Coinbase. Under normal circumstances and with a proper security setup, unlocking a wallet with AAVE won’t expose you to much direct risk.
Once you are logged in, the next step is to make your first deposit so you can either start earning interest or setup the collateral to take out a loan. On the top menu you can choose the deposit tab. This will lead you to the deposit screen which will show you what the current interest rates are in annual percentage yield, or APY.
Interest rates change all the time, but during our investigation we found that stablecoins had the highest interest rates by far. For example, USDC and TUSD were both hovering around 12%. ETH, on the other hand, was trailing behind at just under 1%. Some assets even had 0% interest rates. Comparing this to other DeFi services, 12% interest for stablecoins is very competitive.
Interest rates for borrowing were also incredibly diverse. During our investigation, we found interest rates ranging from 0.16% for UNI all the way up to 25.44% for USDC, variable APR. Just as with deposits, these rates will change all the time depending on market conditions. AAVE also allows user to choose (and switch back and forth between) variable and stable APR’s. Currently, the stable APR options were even higher, with USDC coming in at a whopping 30.44%. Not all assets had a stable APR option.
AAVE explains the difference between stable and variable rates on their official website with the following:
The stable rate, as its name indicates, will remain pretty stable and its the best option to plan how much interest you will have to pay. The variable rate will change over the time and could be the optimal rate depending on market conditions. You can switch between the stable and variable rate at any time through your dashboard.
Regardless of this being a crypto loan or a traditional loan, a 25.44% to 30.44% interest rate is quite high. In fact, it’s on par with most high-interest credit cards and short term traditional finance loans. It’s important to remember, however, that the crypto economy is currently experiencing a bull market at press time. This will definitely influence interest rates both on the borrowing and lending sides. Unfortunately, AAVE doesn’t seem to populate any data under it’s historical rates section for us to compare to previous time periods.
One final thing to remember when borrowing with AAVE is that the company behind it does collect an origination fee with each loan. Specifically, the groups advises that “a 0.00001% of the loan amount is collected on loan origination”.
The AAVE Token and Staking Rewards
Another way to earn with AAVE is by owning and staking the platform’s native asset. Owners of the AAVE asset can deposit them into what the platform calls their “safety module”. The safety module is used “as a mitigation tool in case of a shortfall event”. In simple terms, if something bad happens to the market where depositors could lose some or all of their deposits, the contents of the safety module can be used to repay depositors.
As compensation for taking on the risk, deposits made into the safety module will earn a regular return called a “safety incentive”. According to stakingrewards.com, the safety incentive rate is 4.51% at press time. At current prices that would mean $0.75 per month income, per AAVE staked.
The AAVE asset has seen sharp price increases since it’s introduction from $20 in November 2020 to the current price of over $180 in January 2021.
Advanced Features of AAVE
One thing AAVE offers that some other DeFi platforms don’t is the ability to tokenize and trade or sell your interest-earning deposit directly. This works through a process called tokenization.
According to the white paper, deposits are converted into a “corresponding amount of derivative tokens” that “map 1:1 [to] the underlying assets”. These derivative tokens are called aTokens. Depositors can choose to either redeem their interest-earning aTokens for their original asset plus interest, or they can directly sell or trade aTokens on any market that supports them.
Another feature that will interest developers is what the group calls Flash Loans. These are micro-term loans that last only the length of a single Ethereum block. They allow smart contracts to take out loans without putting up collateral as long as the loan is returned with the one block window. You can read more about Flash Loans here.
Balancing the Risks Versus the Rewards
AAVE has a lot of features to offer both those seeking loans and interest income. The platform is also wide open to anyone and has zero restrictions on who can join. However, as with all DeFi platforms and apps, participating in AAVE isn’t risk-free. The main potential risks with using AAVE is that funds could be lost due to a hack, a major black swan market event, or a technical glitch stemming from smart contracts.
So far none of these seem to have happened. What’s more, the platform does have it’s safety module program that encourages individuals to essentially insure at least some assets against loss. In the end, you’ll need to carefully weigh both the opportunities and risks yourself.
Is AAVE a solid way to earn and borrow, or is it too risky? Let us know your thoughts in the comments below.
MicroStrategy Completes Another $1 Billion Bitcoin Buy
MicroStrategy, the company, spearheaded by one of Bitcoin’s biggest proponents, MicroStrategy, has just confirmed the purchase of another 19,452 BTC.
- In an announcement published today, February 24th, MicroStrategy, the largest independent publicly-traded business intelligence company, has revealed the purchase of 19,452 bitcoins.
- The company paid approximately $1,026 billion in cash for the BTC.
- The average price at which MicroStrategy executed the trades is approximately $52,765 per coin, which includes the expenses and fees.
- With this, the company now sits on approximately 90,531 bitcoins, currently worth just shy of $4.6 billion.
- This equates to 0.43% of the total supply of Bitcoin that will ever be in circulation.
Speaking on the matter, Saylor said:
The Company remains focused on our two corporate strategies of growing our enterprise analytics software business and acquiring and holding bitcoin. […] The company now holds over 90,000 bitcoins, reaffirming our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, can serve as a dependable store of value. We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities in capital raising transactions with the objective of using the proceeds to purchase additional bitcoin.
- The move was somewhat expected. As CryptoPotato reported earlier in February, the company revealed its price to offer convertible senior notes to raise money and buy Bitcoin.
Simplex Partners With Opera to Bring In-Browser Crypto Purchases
Users of the popular browser Opera will have the option to purchase cryptocurrencies directly from it following a partnership with the crypto-fiat processor Simplex. The integration will also enable users to set up personal cryptocurrency wallets to store the newly-purchased digital assets.
Opera Users To Buy Crypto From The Browser
Founded in 2014, Simplex describes itself as a company that has “been changing the status quo of crypto on/off ramps.” In a press release shared with CryptoPotato, the Israel-based firm announced its latest endeavor to bring cryptocurrencies to the masses.
Simplex has partnered with the multi-platform web browser Opera. As a result, Opera users will “be able to buy and sell cryptocurrency instantly within the privacy-centric browser.”
The statement reads that this strategic partnership comes amid times when the retail investors are looking for an easy way to enter the cryptocurrency space as the bull run has garnered their attention once more.
As such, being able to create their own digital asset wallets without having to leave the browser that enables them to buy, sell, or simply HODL their coins would enhance mass adoption, the firm said.
“Now Opera users can access Simplex’s extensive range of supported cryptocurrencies from within the browser wallet itself, and move between fiat and cryptocurrency with ease, enjoying competitive rates.” – reads the announcement.
Back in late 2018, Opera became the first web3 and blockchain-ready browser upon launching web3 support, dApp explorer, and its native crypto wallet for Android. Shortly after, Opera made the same upgrades for its desktop and iOS versions. The cryptocurrency wallet currently supports Bitcoin (BTC), Ethereum (ETH), and Tron (TRX).
A Member of the Visa Network
As recently reported, Simplex reached another milestone as it became a principal member of Visa in Europe. Consequently, the EU-licensed financial institution can now offer fiat to crypto solutions to users wishing to utilize digital assets for regular payments.
Following the partnership with Opera, the firm touched upon its relationship with Visa as both collaborations could help with its core mission to “democratize cryptocurrencies and pioneer new and innovative capabilities for the entire fiat to the crypto ecosystem.”
It’s also worth noting that Opera has now joined another browser in providing instant cryptocurrency purchases. Binance partnered with the Brave Browser last year, but it enabled only users of the popular exchange to interact with digital assets.
Student Coin Tokensale Now Live Till April 30
[PRESS RELEASE – Please Read Disclaimer]
After 12 years of existence, it was about time for crypto to be recognized as it deserves. Step by step, blockchain technology made its way to public institutions after it conquered vendors and business enthusiasts.
With all the issues that came with bank services, no wonder people are so hyped over the idea of crypto payments – which provide users with data and financial security.
Tokenization got its spotlight due to all the solutions they offer in terms of fair payments, loans, and votes.
And to bring the crypto area one step forward, a dedicated team developed one of the most intriguing utility tokens that will forever change the way we see crypto – the STC token, available on its dedicated ICO since February 1st.
What is an STC token?
STC is the core utility token of the Student Coin blockchain project – that makes possible the creation of personalized tokens without strong technical knowledge.
Having an account on the platform allows you to create:
- Personal tokens – unique assets tied to a single account;
- Startup tokens – assets that help you take a step forward to your dreams;
- Corporate tokens – unique assets dedicated to a single company;
- DeFi tokens – assets that allow you to perform various bank activities without the intervention of third parties;
- NFT Tokens – transferable tokens that make possible the switch between platforms.
All these tokens are valued based on the STC Token, and they can be used for exchanges, trades, even crowdfunds.
Why is the STC token special?
The thing that makes the STC token superior to other tokens is its focus on the most important people in the world’s economy – students.
They are the next generation of employees, which will mark the success of current and future companies. To give people the chance to better education, there’s a need to make university programs more accessible.
But it’s not that easy. Reducing tuition fees will lead to a lower budget to afford qualitative researchers, teachers, programs, international collaborations, and so on.
Until now, the solution was bank loans. However, with our unpredictable economy, people lost trust in bank services. And who can blame them?
Therefore, Student Coin’s team came with a solution that decentralizes student loans – crowdfunding with personal tokens.
How does it work?
The future student creates its personal token. This token is put on the Student Coin market. The STC holders purchase the tokens until the student receives the money needed for tuition. After the student graduates and finds a job, a part of his salary will be locked to pay the loan. The STC holders receive a cyclical profit payment for their involvement.
This project is sustained by over 500 top universities worldwide, including Harvard University, the University of Manchester, and the University of Copenhagen.
A simple way for students to get the funds they need to achieve their dreams. At least, that’s the main focus, but this process can also be done for visionary entrepreneurs.
And that’s not the only reason why Student Coin studs out. Holding STC tokens give users the chance to vote in the project’s development and even sign petitions if they’re needed. It’s an entire ecosystem created to give people what they need and raise the utility of cryptocurrencies.
How can you buy STC tokens?
To get your STC tokens as soon as possible, make sure you don’t miss the Student Coin Launchpad ICO, available until April 30th.
Although it started just 23 days ago, the team already raised $2 million worth of STC tokens and completed 35 phases.
Every phase finished till now had a hard cap of 100K USD, and the price increased by 0.0002 USD with every reloads.
Joining the ICO doesn’t just give you access to these tokens in advance, but it also gives you additional assets.
If you recommend the ICO to your friends and send them a unique referral link, you can earn 20% of ETH invested by every friend of yours, alongside 30% of their STC purchases.
Your friends also get an additional 5% of STC purchased.
Who is behind Student Coin?
Student coin is backed by a dedicated team of 44 people from 12 different countries, ready to expand crypto usability and create solutions for the world’s needs. Among them, you can find the former CTO of IBM for Europe, for example, or the president of the Harvard University Club of Poland.
By the end of 2021, the team plans to develop and implement STC Exchange, STC Terminal, and even an STC App, alongside listing the token on major crypto exchanges.
So, if their innovative ideas caught your attention, join the ICO and make sure to follow them on social media to be up to date with their features.
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