AAVE Price Analysis – 10th March 2021

Aave is the Finnish word for “ghost”, and the name of an open-source non-custodial protocol for decentralized lending and borrowing on Ethereum (ETH). There are currently 20 supported cryptocurrencies available on the Aave (AAVE) platform. Initially known as ETHLend (LEND), the AAVE protocol was founded by Stani Kulechov and launched in November 2017. An ICO raised US$16.2 million, with 37,600 ETH collected. Originally a decentralized peer-to-peer lending service, the model pivoted to liquidity pools.

LEND rebranded to AAVE in September 2018. The AAVE protocol launched in January 2020, with a V2 launching in October 2020. A 100 to 1 LEND to AAVE token migration also occurred in October 2020.

The AAVE protocol enables lenders to mint ERC20-compliant tokens, at a ratio of 1:1 to a supplied asset. Lenders receive continuous earnings that evolve with market conditions with a rate that reflects supply. Borrowers can opt for fixed or variable rate loans with a collateralization ratio and liquidation thresholds dependent on each asset. Variable interest rates adjust algorithmically based on supply and demand.

The loans have a 0.25% origination fee, while AAVE holds a liquidity reserve to mitigate against withdrawal risk. AAVE v2 allows users to swap their collateral to another asset, which helps mitigating risk, where underwater loans face liquidation.

Technical Analysis

Watch the full AAVE Technical Analysis on YouTube