AAVE is the native token of Aave, a DeFi protocol . The AAVE token generally functions as a governance token, but also provides the holder with incentives such as fee rebates on the lending protocol.

Aave Protocol – Background

Aave (which means “ghost” in Finnish) was known initially as ETHLend when it launched in November 2017, but the rebranding to Aave happened in September 2018. Stani Kulechov founded Aave in both its names and forms. At the time, he was frustrated at the lack of lending applications on Ethereum — and his project was built before the term “decentralized finance” really existed.

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How does Aave work:

Aave enables people to lend and borrow crypto via smart contracts based on the Ethereum blockchain. Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a secured loan using this liquidity.

The AAVE token provides holders with discounted fees on the platform, and it also serves as a governance token — giving owners a say in the future development of the protocol.

The project allows users to borrow and lend in over 50 cryptoassets. Aside from Aave’s flagship product of flash loans, another major draw is how those who borrow through Aave can alternate between fixed and variable interest rates.

While fixed rates can provide some certainty about costs during times of volatility in the crypto markets, variable rates can come in handy if the borrower thinks that prices will fall in the near future.

Aave has often been among the DeFi protocols with the most Total Value Locked (TVL), serving as a growing liquidity pool. In addition to the Ethereum version, it also features Avalanche and Polygon liquidity markets.

Further details on trading AAVE on TradeStation Crypto

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