What is Aave？
Aave (from the Finnish word for “ghost”) is an open-source non-custodial protocol on Ethereum for decentralized lending and borrowing. For lenders, the protocol mints ERC20-compliant aToken at a 1:1 ratio to supplied assets. Interest immediately starts compounding continuously, represented by a steady increase in the number of aTokens held by the lender. This interest stream may be redirected to any address, separate from the aTokens that represent the underlying principle.
Users can borrow against most supplied assets; the collateralization ratio and liquidation threshold depend on the asset, as does the liquidation penalty, which anyone can get as a bonus for liquidating an unhealthy loan. Interest rates adjust algorithmically based on supply and demand, but Aave lets borrowers opt in to and out of (at any time) a stable rate that changes less often. The protocol keeps a liquidity reserve to ensure withdrawal at any time.
Aave offers flash loans: trustless, uncollateralized loans where borrowing and repayment must occur in the same transaction. Aimed at developers, this feature could lead to innovative uses of DeFi. Aave’s native governance token is LEND; the only fees are 0.25% of originated loans and 0.09% of flash loans; these go toward burning LEND, rewarding lenders, and compensating affiliates.
Launched in Nov. 2017 as P2P lending project ETHLend and rebranded to Aave in Sept. 2018, the protocol went live on mainnet in Jan. 2020 with 16 supported assets (13 can be used as collateral). Aave’s code has undergone two external security audits, and Aave maintains a bug bounty program.
How to use Aave in TokenPocket?
1. Enter the Dapp
Open your TokenPocket app and select an Ethereum wallet. Search for Aave in Discover. Then select Aave and Browser Wallet. You can see most functions in its menu, with the most useful and common ones being Deposit and Borrow.
2. How to Deposit
You can choose the token to deposit in All or Stable Coins in Deposit section. After selecting the token and amount to deposit, you will need to tap on Submit in both Approve and Deposit.
Then you need to set the Gas price and confirm the payment. Please set an appropriate Gas price as Ethereum is not stable recently.
When you need to withdraw money, please go to the “Profit” section and select “Withdraw”. Choose the amount to withdraw and confirm the transaction.
In Aave, your funds are stored in a decentralized loan protocol (DLP), which is public and open-source, and has been formally verified and reviewed by third-party auditors. You can withdraw funds from the fund pool on-demand, or export the debtor’s position in aTokens. aToken can realize transferring and trading like any crypto assets on Ethereum.
3. How to Borrow
For borrowing, please choose the asset you want to borrow, and select the amount you want to borrow based on your available deposit, which functions as the collateral. Choose between the Stable borrow APR and Variable borrow APR for an interest rate module and confirm your transaction. Later, you can modify the interest rate unlimitedly according to your needs.
When repaying, please go to the Borrow page and then tap on Repay for a certain asset. Then, select the amount to be repaid and confirm the transaction.
The maximum amount that can be borrowed depends on the value of your deposited assets and the available (asset pool) liquidity.
The DeFi Series is an inclusive knowledge-sharing platform initiated by TokenPocket. It aims to provide community members with knowledge relating to blockchain and cryptocurrencies, as well as wallets. As a leading global wallet, TokenPocket provides crypto assets management service for millions of users worldwide. Column articles are written and submitted by TP Man and the copyright belongs to the author and TokenPocket. Please cite the source when reposting.