Aave is one of the top decentralized finance projects in the crypto space. The Aave token stands at a price level of $416 with the price moving up by 8% in the daily timeframe and nearly 30% in the past seven days. It is the twenty-seventh largest cryptocurrency in the market with its total value locked at $13 billion. The cryptocurrency had been on the forefronts of the recent DeFi explosion which makes it a good bet in the market – with 350% gains in the yearly timeframe.
What is Aave?
Aave is a deFi lending and borrowing protocol which eliminates the need for centralized intermediaries – making the process faster and more efficient. The mechanism of the system is simple – just like any traditional borrower borrowers pay interest while lenders earn interest. However, unlike traditional banks, the process of issuance of a loan is automated and done through smart contracts and instead of borrowing from an institution, loans are borrowed from other people on the network.
To receive a loan on the platform, a greater amount than the loan of another supported cryptocurrency has to be submitted as collateral. This is regarded as a disadvantage of DeFi platforms but it is done to secure the network in case the price of the collateralized cryptocurrency plummets. Aave currently supports over 20 Ethereum-based cryptocurrencies as collateral including stablecoins.
Aave is an ERC-20 token – based on the network of Ethereum. Aave was created in 2017 by Stani Kulechov as ETHLend. The founder’s vision was to create a marketplace which would connect loan borrowers and lenders. However, the crash subsequent to the bull run of 2018 forced Kulechov to improvise and rebrand ETHLend as Aave.
Is it a good investment?
The decentralized finance sector has become one of the best performing in the cryptocurrency space. Aave has been one of the leaders of the DeFi explosion being considered one of the market leaders. The positioning that Aave has also lets it enjoy superiority in the space. Aave has entered into various important partnershipswith key players in the crypto space.
Axie Infinity is one of the partnerships of Aave. Axie Infinity’s own performance in the past few weeks had been commendable and any boost to the network can translate into positive outcomes for the DeFi lending protocol. Some of the other partnerships are Pixelcraft Studios and Balancer.
The fundamentals of the network are strong, hinting it has the potential to make a good investment in the long-term. The deFi space has been gaining increasing popularity and is expected to grow at a phenomenal pace. In terms of technicals, the indicators in the monthly timeframe suggest a strong signal of buy with the market being overridden by bullish momentum. Wallet Investor is also bullish on the future of the cryptocurrency and projects a price level of $764 in a year’s time and a price of $2378 in five years’ time. Long Forecasts’s algorithms predicts the price at the end of 2022 to be at $1824
