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Introduction
Aave is a DeFi lending protocol. It’s an open-source and non-custodial money market platform that lets you earn interest on deposits and borrow a whole host of digital assets.
Put even simpler, it’s a platform where you can lend and borrow crypto.
…but it’s decentralized, so nobody controls it. That’s one of the reasons it’s unique.
The decentralization already makes it quite different from the other crypto lending platforms—like Celsius, BlockFi, and Nexo — as it is not controlled by any one entity. Nobody is the “custodian” of the crypto you deposit.
Instead, lending is totally controlled on the Aave blockchain through the use of Smart Contracts. It was built on the Ethereum blockchain and is hence, completely decentralized.
Aave was actually one of the first Ethereum-based lending platforms on the market when it was launched under the name “EthLend" back in 2017.
In September 2018, they rebranded with the name Aave (which is Finnish for “Ghost”) and the project took on a whole new form. This was perfect timing, as it happened right at the same time as the DeFi revolution.
As of this writing, Aave offers support for lending and borrowing 28 different cryptocurrency assets. They also expand beyond a simple money market protocol into some less common or unique features:
They offer flash loans, uncollateralized loans, rate switching, and a whole slew of other DeFi tools we’ll explore further below.
Aave has gained considerable attention in the DeFi space because of these features. There’s a lot to talk about, and we’re about to cover everything.
But first, let’s start at the beginning:
Aave Founder: Stani Kulechov
By education, Stani Kulechov is a lawyer. He is from Finland and graduated from the University of Helsinki with a master’s degree in Law in 2018. He has worked a few jobs in the legal industry prior to plunging into crypto.
But he said the real reason he went into law in the first place is because a passion he developed as a teenager led him to get his degree.
That passion was building financial applications — specifically, F2 applications.
F2 applications are very similar to DeFi. They are basically open-source code with the goal of having a development standard for the financial services industry that can offer a cost-saving, risk-reducing method for building financial solutions. And can then integrate all kinds of financial tools into technology.
In his late teens, Stani and his brother started building F2 products, mostly by developing financial applications on Linux. Some of the products he particularly enjoyed building were focused around financing app developers who release applications in the App Store or Google Play.
But one thing he constantly ran into with his early developing experience were regulations that blocked his projects. It caused him to want to understand the rules of business and regulation better.
That’s why, around age 18 or 19, he decided to study law at University.
That was an advantageous position to have for what would come later. Because while learning law, it caused him to start thinking about contracts and legal agreements — and how to make them more efficient.
Because as we all know, normal (i.e., NOT smart) contracts are anything but efficient and seamless.
If you have a contractual dispute with someone it’s hard to take it to court, because the system has so much bureaucracy. Plus you need to pay for a lawyer, and there's a risk that after going through a lot of money and time spent, you’ll get an undesirable ruling anyway.
That’s why when Stani discovered what blockchain—and specifically, Ethereum’s Smart Contracts does, he was all in.
Blockchain allows us to have a piece of code that never changes. So once you deploy the code into a public blockchain ledger, it can execute a contract exactly how it’s programmed. There’s no guesswork, and no court disputes.
This is what inspired Stani to build financial dApps, and eventually Aave.
Founding Of ETHLend
Stani started out building his project on Ethereum because it was the only open system back then that allowed for the complex coding that allowed him to build what he wanted to build.
In early 2017 Stani started building ETHLend—what would later be re-named to Aave--as a peer-to-peer lending protocol.
Over the course of that year, ETHLend started attracting attention from the Ethereum community. Stani saw the potential of decentralized lending and decided to hold an ICO (Initial Coin Offering) at the end of 2017.
Their ICO raised $16.2 Million.
This ICO allowed them to hire more developers and focus on making improvements to the protocol throughout 2018.
Transition To Peer-To-Contract & Rebranding To Aave
Initially, borrowing and lending on the ETHLend platform was Peer-To-Peer — meaning each loan took place on smart contracts between two individual people only.
Soon, they realized Peer-To-Peer lending and borrowing between individuals was not efficient and users reported feedback that it was kind of annoying. Users interacting with other users via smart contracts was slow, tedious, and took too long.
Their main concern was that this one-on-one interaction style didn’t have a great ease-of-use. Especially if there’s no one on the other side who wants to interact with you.
At the time, other projects like Uniswap and Compound started leveraging a new model: Peer-To-Contract.
The Peer-To-Contract model is based on a contract with pooled funds, where the users interact with the “pool of funds” rather than with each other directly.
This eliminates the wait time to find a counterparty, and makes the whole process of a decentralized protocol a lot smoother.
Stani and the whole developer team decided to transition the project to the Peer-To-Contract model in 2018—and at the same time, rebranded the whole project, changing the name to Aave.
As of this writing, Aave has attracted over $25 billion in total value locked across three different blockchains. Which technically makes it the largest DeFi protocol.
How It Aave Works
When it comes to the protocol itself, Aave users can become depositors, or borrowers.
Depositors provide funds to borrowers in return for interest on their deposit. Borrowers are willing to pay interest on the amount they borrowed in exchange for having a lump sum of money available immediately.
For example, if you have a particular stablecoin sitting around—like Dai— you might decide you want to generate interest on it. So you can deposit your Dai, generate interest on it, and you can have more Dai than you started out with.
The interest rate you’ll get in return is determined by the ratio between supplied and borrowed Dai in the pool.
The supplied Dai can then be used by borrowers -- but in order to make sure the borrowers don’t run off with the loan, they have to provide a collateral.
For example, if you have ETH tokens you plan to hold, and want access to a Dai loan, you can use your ETH as collateral until you pay back your loan on Dai.
All standard loans in Aave are over-collateralized. That means the collateral must be higher than the borrowed amount. This protects the whole protocol from being under-collateralized, and not being able to repay depositors.
In this model, depositors basically provide liquidity. This is also why Aave is also described as a “decentralized liquidity market protocol”
More On Depositing:
As a depositor, you can earn interest on your coins in a few different ways.
First, as I said above, interest is determined by current supply and demand in the pool. That makes it a variable interest rate - because the amount you’re making on your deposit changes all the time based on those factors.
But another type of interest rate that Aave offers is called a stable borrow rate. This is a distinctive feature to Aave, and not available in any other lending DeFi protocol. It’s a way of offering a fixed interest rate -- usually, at a slightly higher rate. More on that in a moment.
Here’s how you actually earn interest on your deposited coins:
Depositors who provide funds to a smart contract receive special tokens called “aTokens” in exchange for whatever they deposited.
The value of the aTokens are pegged to the value of whatever token you deposited at a 1:1 ratio. So, if you deposited ETH, the aToken you get in exchange will be pegged to the value of the ETH tokens you deposited. BUT, it will also generate the appropriate interest rate with time, as you hold it.
So the balance you have of aTokens represents your deposited amount, PLUS the accrued interest -- and it keeps increasing according to the current borrowed interest rate of the protocol.
Also, aTokens are just ERC20 tokens. This means you can basically send them to someone else, and the balance of their aTokens will keep on increasing in the other person’s wallet automatically.
Finally - your deposit does not only earn interest, but can also serve as collateral if you want to borrow any crypto.
More On Borrowing:
First - when taking out your loan, you will have two options:
You can borrow the crypto via a variable interest rate, or the stable rate as described above. (Similar to a “fixed” rate).
The stable rate does act like a fixed rate in the short-to-medium term. However it is not guaranteed in the same way that you have a fixed-rate loan from your bank.
Since crypto can be so volatile, it can be re-balanced if there are severe changes in the market conditions. This is something borrowers should be aware of.
At Aave, the fixed rate is always higher than the floating rate to account for risk. The exact rate you’ll be charged depends on the utilization ratio in the pool.
Whenever there is more demand to borrow, both of the rates will slowly increase.
There is a particular turning point where the rates spike in order to account for the demand. This is currently at 90% utilization ratio.
This is just a rough overview — if you want even more utilization you can always take a look at the model in their white paper.
One last thing to note about lending: you have to ensure your collateral position is always above the liquidation threshold. This is because if you drop below 80%, you will have to fork over a liquidation penalty - which is 5% of what you borrowed.
That is the basic functionality of Aave.
Now let’s dive into some of their other features:
Flash Loans
Flash loans are an invention of the DeFi space. They do not exist in traditional finance.
Let’s first talk about what a flash loan is generally, then how you can use them with Aave.
Flash Loans are loans you can get without putting down collateral that can be taken out in a single instant. But you can only do this on ONE condition:
The loan has to be repaid within the same blockchain transaction it is approved for.
And if it’s not repaid, the whole transaction is void and no funds would ever have been originated.
So at a base level, you can take out a loan for as much crypto as you like. $1 million dollars in ETH, if you so desire. But you have to be able to pay that back within the same transaction, plus a 0.09% fee.
If you can do that — the whole thing will be legit.
And what is the point of that?
There’s actually quite a few uses for flash loans:
First, taking out flash loans could allow you to arbitrage any mis-pricing of a token on decentralized exchanges.
For example, if the XYZ token on Uniswap is trading for $100, but is trading for $102 on DYDX, then there is an opportunity to bag an instant profit here.
I can take out a massive flash loan, instantly buy XYZ coin on uniswap, sell it on DYDX, and then pay the loan at Aave all in one transaction.
Of course, there will be fees involved, too. But as long as the profit is above the fees, and the user thinks they can pull it off, it might be worth a spin for some people.
Another use of these flash loans is to refinance lending.
For example, you could be paying a rate of 10% on Compound finance, but you might find a better rate at DYDX. Say 5%.
You can then refinance this loan down to 5% without any collateral. All you have to do is borrow a flash loan on Aave, pay down the compound debt, borrow on the DYDX, and repay on Aave. All in one go.
Flash loans have also been used in the practice of Yield Farming. “Farmers” use them to move collateral from one protocol in order to earn additional liquidity tokens and benefits.
Aave was one of the first few DeFi protocols to implement flash loans and they have already been integrated into a number of other projects.
A final word: Flash loans do require an understanding of smart contract programming. So if you are thinking of doing this to maximize your DeFi gains, you want to make sure you know Solidity.
Introduction Of Additional Lending Markets On Aave:
There are a few new lending markets that Aave is one of the first projects to offer. Here are some quick overviews of a few of them:
LP Tokens
Uniswap is a widely-used decentralized exchange on the market. At Uniswap, not only can you swap your tokens but you can also supply them and provide a liquidity pool.
By providing liquidity you can earn fees, although you are not guaranteed any sort of return like those that you can earn in a lending protocol.
That is why projects started issuing what are called liquidity pool, or LP tokens.
These are basically tokens issued by the project as an incentive to provide that liquidity.
Aave is one of the first protocols to open up a lending market for these LP tokens.
You will eventually be able to lend or borrow these tokens. Which means you no longer have to rely on their price appreciation in order to make some gains on LP tokens.
This is a relatively new addition — which means there is no one supplying these tokens currently.
But as LP tokens start gaining traction, more and more users might start to supply them on this market.
Uncollateralized Long Term Lending
This is lending that does NOT require any collateral. Which has not been done at any other DeFi protocol in the past.
It happens through a method of Credit Delegation. While you may not have to put up the collateral to take out the loan, someone else may have - and you can lend against THEIR collateral.
So basically, think of this as a decentralized and automated version of Surety that is often used in the traditional lending space.
In Aave’s Credit Delegation system, two parties enter a fixed agreement to determine interest rates, terms, and governance. Enforced by open-laws blockchain-based contracts.
You can see exactly how this works in the schematic by Aave, featuring Karen and Chad:
Karen is able to earn more return on the funds she has deposited by charging a higher interest rate.
The increased rate compensates for additional credit risk, just like the way banks view it.
This is a new feature that was just introduced. And it’s a taste of things to come.
Aave has integrated with Fiat gateways, too. This basically means that you can directly purchase your crypto to deposit with Fiat currency right there on the platform.
Given that you have Dai in your wallet already, you just send it over, approve on Metamask, give it a few moments and once done, you are ready to deposit.
Confirm the deposit on your metamask, wait for the confirmation to work its way through the blockchain, and that’s it!
You are supplying to the lending pool, and you can monitor your crude interest in the dashboard.
Also note - when you’re supplying funds to Aave, you will receive their aTokens.
Your balance will increase as you earn interest, and you can deposit your aTokens at a later date to get it all back.
So if you have Dai in the liquidity pool, and you want to withdraw your funds, your ADai tokens will be converted back into the Dai tokens in the amount you deposited plus interest.
Aave TVL
At the beginning of 2020, Aave launched on the Ethereum mainnet, and started building users’ interest. This skyrocketed in May 2020, when a surge in DeFi growth, also called “DeFi Summer” started.
Before DeFi summer, the total value locked in Aave was at around $40,000,000.
With launches of new DeFi protocols and yield farming opportunities, Aave’s TVL started rising dramatically: 60 million dollars in June, $400 million in July, and 1.5 billion in TVL in August.
This number remained at 1.5 billion dollars in September, despite the cool-down across the whole defi space.
October saw a drop to around $1B, then $1.6B in November, and $2B in December.
A major surge in DeFi tokens pushed Aave’s TVL to over 3B dollars in Mid-Januiary 2021.
This is basically a 50X increase in TVL, in around 6 months.
Besides that, Aave hit another major milestone: 1 Billion dollars in Flash Loan volume.
There were a few other important events that took place during DeFi summer: Aave raised 3 million dollars from venture capital firms, three-arrow capital, and framework ventures.
These firms purchased Aave’s native token, LEND. (Now AAVE)
Aavenomics: A Complete Redesign
In late 2020, Aave came out with a whitepaper called Aavenomics. It basically details Aave’s large-scale enhancements to their code and plans for 2021 and 2022.
In a nutshell this sought to completely redesign Aave’s ecosystem and economic incentives. And to prioritize the protocol’s security, sustainability, and growth.
The first change to happen in Aavenomics was the migration and redenomination of their token from the LEND ticker to the AAVE ticker. This happened on Oct 2nd 2020.
Here’s a Key Summary of the rest of Aavenomics, and what Aave says you can expect from them moving forward:
In August 2020, Aave briefly became the the #1 DeFi protocol, overtaking Maker Dao. The release of Aavenomics might have had to do with this.
Founder Stani Kelechoff revealed his biggest motivation for putting together Aavenomics was to make institutional investors more comfortable with DeFi. Something which is not being done by any other DeFi protocol.
This is why Aave is in the process of receiving the necessary licenses it needs to make it possible for users to buy assets in Aave directly using Fiat.
Aave received the first of these licenses in July from the UK financial conduct authority. This milestone was not revealed until later in august. And in a subsequent interview with the block crypto, Stani noted that Aave had received “The same authorization that Coinbase and Revolut has in Europe.”
And, that “Aave will pilot in the UK before rolling out to cover the whole EEA and expanding globally.”
Aave Raises $25 Million to bring DeFi to institutions.
Aavenomcis must have caught the attention of the right people - because Aave received over $25M in funding from various venture capital funds in October of that year.
According to Stani, the purpose of these funds is to bring in more institutions, and expand Aave’s operations into Asia. Aave is currently based in London.
Grayscale, the largest institutional crypto asset manager, announced their intentions to open an Aave trust. Although that has yet to happen, Grayscale did release a DeFi fund in July 2021 with Aave as the second-largest holding.
Bitwise also launched a DeFi fund with a large allocation to Aave which experienced over $30 million in institutional investment in its first two weeks.
In July 2021, Aave launched its “Aave Pro” platform, which allows institutions to experiment with decentralized borrowing and lending in a permissioned environment.
In September 2021, an Aave governance proposal was tabled by crypto custodian Fireblocks, which detailed Aave Arc - a fully compliant copy of Aave for institutions.
There are about half a dozen institutional investment vehicles with exposure to AAVE, and the recent introduction of AAVE’s new institutional platform is likely to attract more institutional investment.
DeFi Crypto Alliance Projects
In February 2021, Aave linked up with Chainlink, Messari, and a few other crypto projects and companies to launch the GoodFi alliance. The goal of the GoodFi alliance is to get 100 million people to deposit at least $1 into a DeFi protocol by 2025.
In August 2021, Aave teamed up with Curve Finance, Sushi Swap, and Celo to kickstart a $100 million dollar crypto movement called “DeFi for the people,” which aims to make DeFi accessible to the world’s 6 billion smartphone users.
Aavegotchi
Aave created an ETH NFT video game called “Aavegatchi.” It sold out in one minute after launching on Polygon in Spring 2021.
Aave Protocol V2
On December 3rd 2020, Aave officially launched the second version of its protocol, Aave V2. About a year later, they came out with V3 - which is outlined below. But let’s first go over all the features of V2.
Aave V2 contained a whole bunch of new features, and all of the V2 code has been audited by four reputable companies.
The first feature is collateral swaps. This makes it possible for borrowers to instantly change the collateral they are borrowing against.
So if you have a loan out on $1000 ETH, you can swap that with a stable coin like USDT or USDC if the value of your collateral starts to fall.
The second feature is debt repayment with collateral . In Aaave V1, when you deposit ETH and take out a loan in USDC, you have to pay back the USDC you borrowed plus interest to claim your collateral.
In Aave V2, you can actually choose to keep the USDC you borrowed and use part of your collateral to pay back the loan instead.
Third Feature - Debt Tokenization.
In V1, whenever you lend your ERC 20 tokens, you’re given back an equivalent amount of interest-bearing aTokens.
But in Ave V2, you will now also be given aTokens that accrue debt whenever you borrow an ERC20 token. These aTokens can also be traded on Dex’s.
Why would anyone want to hold a token that accuses debt?
Because of the next feature of Aave V2:
Fourth Feature - Native Credit Delegation.
This makes it possible for you to delegate your unused credit. The thought process is: if people who are lending on Aave can trade the aTokens they’re given, then why not make it possible for them to lend those aTokens to other third parties and earn even more interest?
These delegated crypto loans do not need to be over-collateralized.
For example - if you lend 1k USDC on Aave, and receive 1000AUSD, you can lend that 1000AUSD to someone without them having to lend any collateral.
You should do this only with people you know and trust.
But smart contract legal services like OpenLaw make it possible to create legally enforceable loan agreements with strangers.
This makes it possible to take that stranger to court in real life if they fail to pay back your loan of aTokens.
Fifth Feature - Batch Flash Loans
This makes it possible for you to borrow multiple ERC20 tokens in a single flash loan. In Aave V1, you were only able to borrow a single asset in a flash loan.
Aave V2 is also designed to optimize Ethereum Gas fees. Stani believes that this focus on Gas optimization is one of the secrets to Aave’s success.
Aave Protocol V3
Aave V3 was tabled to Aave’s governance forum by developers in November 2021. Aave token holders voted on whether or not to implement it, and 100% of token holders voted “yes”.
Aave V3 will introduce multiple new features to the Aave protocol – three of which we will explore in detail here.
The first feature is called…
Portal
Portal will make it possible for lenders and borrowers to transfer any tokens they have deposited into Aave V3 on one blockchain, into Aave V3 on other blockchains.
Put simply, you’ll be able to “copy and paste” all the crypto you have on Aave from one blockchain to another.
The second feature is called…
High Efficiency Mode (or E-Mode)
E-Mode will make it possible to significantly increase the loan-to-value ratio for certain assets. Specifically, those with the same qualities.
Most loan-to-value ratios on Aave are between 75% and 80%. But this threshold doesn’t make much sense if you’re just borrowing with the same kind of asset.
With E-Mode, you’ll be able to borrow upwards of 98% of the dollar value of the token collateral you provided, as long as the token you borrowed is the same – like USDC and USDT, or WBTC and renBTC.
This means you will effectively be able to double your exposure to any asset – so long as you keep that interest at bay.
The third feature on Aave V3 is called…
Isolation Mode
Isolation Mode will make it possible to add new tokens to the DeFi protocol, while minimizing the risks to the rest of the protocol. This is done by limiting the types of tokens someone can borrow when they first deposit that new introduced token as collateral.
Other V3 Features & Proposals
Other features on Aave V3 include setting limits on token deposits and withdrawals from certain pools, changing future loan-to-value ratios without affecting current loan-to-value ratios, assigning community members to assess the risk of certain tokens, and introducing a grace period for liquidations.
All these parameters will be decided and adjusted by Aave token holders via community governance.
The original Aave V3 proposal mentions that there will be many more proposals relating to V3, such as which blockchains it will deploy on, how long the Aave V3 testnet should run on these blockchains, and how much the developers who coded Aave V3 will be compensated.
The most significant of these proposals was what kind of license Aave’s V3 code should be given – and in December 2021, the Aave community decided that Aave’s V3 code should be given a business license. This means that no one will be allowed to fork the Aave V3 protocol without permission from the community – even though its code will still be open-source.
It’s not clear how this business license will be enforced, but it’s clear that the community was not in total agreement on implementing it: only 55% of participants voted in favor of it.
Aave’s Upcoming Milestones
Besides for V3, there are a few more major projects to look out for from Aave:
Decentralized Social Media
In an October 2021 presentation, Stani revealed Aave’s goal in building a decentralized social media platform:
Stani believes social media platforms have become public goods – and that freedom means having unrestricted access to public goods. Which is why Aave is coming out with a social media platform that will be built in a way where your social media profile, as well as any other content you create on Aave’s platform, will be portable to any other decentralized social media platforms that emerge on Ethereum.
This would make social media censorship impossible.
Aave does not have a specific release date for their social media platform. They have only said it is “coming soon.” Stani said he believes decentralized social media will be the next “hot crypto niche” after NFTs.
Mobile App Release
A proposal for Aave’s mobile app was passed by the Aave community in August 2021. We don’t know exactly what it will look like yet, but it will probably be a mobile version of the Aave protocol with multiple blockchain integrations and a decentralized front end built on IPFS, just like the Aave website app.
Stani also announced Aave will come out with a mobile wallet app, but it is unclear whether the wallet app will be the same app as the Aave protocol app. We also could not find release dates for either of these apps.
AAVE Token:
AAVE first started out with the ticker LEND. LEND was sold in a crowd sale back in 2017, and it’s an ERC20 token that was issued on the Ethereum blockchain.
Total supply was just shy of 1.3B. 1B of those were sold in the crowd sale.
The original purpose of the LEND token was to be a utility token. One that provided users with a number of benefits such as reduced fees, staking rewards, and improved loan-to-value ratios.
However, as EthLend rebranded to Aave, LEND tokens took on use cases related to governance. Holders could now use LEND in order to vote on important proposals in the ecosystem.
These proposals are wide-ranging and include interest rate models, liquidation configurations, and whether Aave should consider adding new assets.
LEND tokens have value not just because of the rights they confer (voting, etc) but also because of their limitations in supply.
This supply is constantly decreasing with the growth of the ecosystem.
Aave is also spending 20% of their fees in order to grow the ecosystem and generate more fees. More fees, more burn, more incentives.
Plus, the Aave team has taken on funding from venture capital firms - Three Arrows Capital and Framework Ventures. And over an equity based VC model, they wanted one thing: AAVE tokens. They invested 3M dollars when the LEND token was 10 cents and now hold over 7M tokens.
TOKENOMICS
Most of AAVE’s circulating supply is in the hands of the community. Some people might argue that its entire supply is in the hands of the community given that the Aave reserve is also owned and operated by the Aave community.
Aave has a small supply relative to most other DeFi tokens - 60 million Aave. And 3M of those tokens are out of circulation.
Aave is also not nearly as inflationary as other DeFi tokens. This is because the yields earned on the Aave protocol come entirely from the assets being lent IN it.
This is in contrast to DeFi protocols like Curve finance, where CRV tokens are constantly being printed to reward liquidity providers.
Based on our calculations, Aave has an annual inflation rate of about 1.2% per year.
Over the last year, there were about 1.5 million additional AAVE introduced to its circulating supply. Assuming an average price of about $250 per token, this totals about $375 million of sell pressure – assuming all that AAVE was sold.
AAVE has several demand drivers:
It can be staked to earn an annual interest rate of about 5% a year. And it gives its holders governance over the protocol itself.
Finally, the fact that AAVE stakes can lose 30% of their stake if something goes wrong with the protocol gives them an incentive to make absolutely sure that any changes to the protocol are both safe and sustainable.
This is likely a part of why Aave received an Economic Safety Grade of 95% according to the Gauntlet. A company which simulates interactions with dApps, Dex’s and DeFi protocols.
Conclusion
Aave offers a set of tools in the DeFi space that are the first of their kind. It’s likely we’ll start to see Aave offer decentralized insurance via its safety module, too. After all, crypto is wave after wave of volatility, and Aave is anticipating a demand for trust and protection in the DeFi space.
Aave has been preparing for institutional investment since it first launched. And they’ve garnished the investment of several institutions already. In the future, they will be able to point to their economic incentives, built in insurance, and professional audits when the suit-and-tie types start to ask about whether their funds will be safe.
Aave received an electronic money license from financial regulators in the UK recently as well. The Aave team had been working to get that license since 2018.
This only just scratched the surface of what Aave is capable of. They also basically invented “cryptocurrency debt” that can be traded. Debt is purchased all the time in traditional finance, usually in the form of government bonds -- which is basically just government debt.
While it’s very unlikely that we’ll see government bonds being offered on Aave any time soon, the door to those sorts of markets has been opened for the first time.
By the time Aave gets some serious global traction, the Aave token will probably still have a small supply and next to no inflation.
SOURCES
https://web.archive.org/web/20201215224326/https://medium.com/aave/strategic-investors-3-arrows-capital-framework-ventures-take-3m-position-in-lend-to-accelerate-916da9dbb1ca
https://defirate.com/
https://docs.aave.com/faq/governance
https://docs.aave.com/developers/
https://docs.aave.com/faq/depositing-and-earning
https://docs.aave.com/risk/asset-risk/amm-market
https://www.youtube.com/ watch?v=P6JBcCo_oWY
https://github.com/OpenF2/F2
https://github.com/aave/aave-protocol
https://aave.com/
https://www.youtube.com /watch?v=WwE3lUq51gQ
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