CoinEx Institution：Cryptocurrency Research Report — Aave
Author：CoinEx Global Ambassador NeoBeum
Project Overview
Aave is a Finnish word that translates to ‘Ghost’ in English. The foundations for Aave is to be transparent and create an open and non-custodial platform for decentralized finance that uses ‘aToken’ to peg a 1 to 1 ratio for the underlying asset. The project is headquartered in London, England, and lists 18 individuals from various backgrounds as the core team responsible for Aave.
The Aave project’s main site hosted at https://aave.com and the protocol is open source with repositories available at https://github.com/aave.
The Aave platform is built on the Ethereum network and currently offers lending solutions for 16 cryptocurrencies, 6 of which are the stable coins: DAI (DAI), USDC (USDC), TrueUSD (TUSD), Tether (USDT), Synthetix USD (SUSD) and Binance USD (BUSD), with the remaining of the lending pool comprised of Ethereum (ETH), ETHLend (LEND), Basic Attention Token (BAT), Kyber Network (KNC), ChainLink (Link), Decentraland (MANA), Maker (MKR), Augur (REP), Synthetix (SNX), Weighted Bitcoin (WBTC) and 0x Coin (ZRX).
Aave has its founding roots from ETHLend which was an Estonian ICO launched late 2017. In September 2018, ETHLend transitioned to Aave.
Business Model
Aave generates its revenue through interest rates bound to customers when taking contracts. Tokens available are pooled together known as the LendingPool and a Lending Pool Configurator is responsible for calculating the interest rates for the contracts issued. Collateral is backed as ‘aTokens’ when deposited to the Aave lending pool. Rates are calculated with a Lending Rate Oracle and instantaneous market value of tokens influence the overall value of these variables, and rates for Flash Loans.
Team Information
As ETHLend expanded, it transformed its operations and Aave was conceived. The team carries over its Estonian core members and recruited new members in London. At time of writing this short analysis, Aave is also hiring a Back End developer to join the team.
Project Roadmap
2017–11 — Initial Coin Offering
2018–09 — ETHLend becomes Aave
2020–01 — Launch of Aave Protocol
Governance Model
The Gonernance for Aave occurs at two levels, The Lending Pool Governance and the Protocol Governance. The lending pool is governed with aTokens and voting is weighted from the share of the pool’s liquidity. The protocol is controlled by the LEND token and voting is weighted based on the share of tokens held at vote counting.
Technical
Further Technical reading and Whitepaper can be located at https://github.com/aave/aave-protocol/blob/master/docs/Aave_Protocol_Whitepaper_v1_0.pdf
Community
The social networks for Aave indicates a community base of approximately 44,000 users, with estimates of 6,000 active users in telegram.
Competition
Aave is one of the smaller DeFi projects with a market cap of approximately $22,000,000 USD. Direct rivals would include Compound, Fulcrum and EOSREX on the EOS Blockchain.
Risk Evaluation
With a relatively low market cap, Aave reduces the risk by providing a non-custodial solution. However, this does not grant immunity from market fluctuations, with recent examples of the market downturn in March 2020. The nature of lending platforms expose investors to high risk of liquidation and bankruptcy when major market movements reduce overall capital and confidence in the market.
Being a smaller project in comparison to competition, Aave does not provide competitive interest rates that would otherwise entice investors to their platform.
The content is for opinion sharing only and should not be relied upon to make any investment decisions.
