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It is one of the most prominent digital currencies in the world of decentralized finance (DeFi), and is based on a decentralized platform that provides lending and borrowing services using digital currencies. It was founded with the aim of providing a decentralized and secure financial system that allows users to conduct financial transactions quickly and transparently, without the need for traditional intermediaries such as banks.
History of the currency and its establishment:
Launched in 2017 as ETHLend, AAVE aimed to provide a cryptocurrency lending and borrowing service on the Ethereum network. In 2020, the project was renamed AAVE with the aim of expanding the scope of services and making them more compatible with modern DeFi technologies.
How does AAVE work?
1. Lending and borrowing:
Users can deposit cryptocurrencies on the AAVE platform and earn interest, or they can borrow cryptocurrencies against collateral. Transactions are conducted via smart contracts that ensure transparency and speed.
2. Flash Loans:
These are loans that can be obtained without the need for collateral, provided that they are repaid in the same transaction. This is a distinctive feature used in cryptocurrency arbitrage or loan restructuring.
3. The mechanism used:
The system is based on Proof of Stake (a system where people choose to verify transactions based on the amount of currency they stake as collateral. The more they stake, the higher their chance of verification), which makes operations faster and more efficient, as transactions are verified using incentives for network participants.
Number of AAVE Coins and Their Relationship to Bitcoin
Number of AAVE coins:
The total maximum supply of AAVE is 16 million coins, making it a very limited supply coin.
So far, about 14.2 million AAVE have been issued, which means that most of the coins have already been issued, contributing to their scarcity.
Compared to Bitcoin:
Bitcoin: The maximum number of bitcoins is 21 million, which is also a limited supply.
AAVE: The maximum supply is 16 million coins, so the number of AAVE coins is less than Bitcoin.
So, in terms of supply, AAVE has a less limited supply than Bitcoin, which may increase its scarcity and ability to move in the market.
AAVE Cryptocurrency: How is it used?
1. Cryptocurrency Lending:
Users can deposit cryptocurrencies on the AAVE platform and then earn interest on the deposited amounts. The interest rate varies depending on the supply and demand in the market.
2. Borrowing cryptocurrencies:
With AAVE, users can borrow cryptocurrencies against collateral. This gives them the ability to use the borrowed funds for other transactions such as investing or trading.
3. Governance:
AAVE is also used as a governance token in the protocol, meaning that token holders can vote on important decisions that affect the development of the protocol.
Is AAVE halal or haram?
In answer to the question of whether AAVE is halal or haram, the nature of the transactions made using the currency must be considered. Based on Islamic principles, digital transactions are evaluated according to their compliance with Islamic law.
1. Interest (usury):
If lending and borrowing transactions involve interest (whether fixed or variable), this is in conflict with Islamic law which prohibits usury. Therefore, if AAVE is used in transactions involving interest on loans, it may be halal.
2. Flash Loans:
On the other hand, AAVE offers quick interest-free loans, and these loans do not contain any kind of interest or usury, which may make them closer to transactions that can be compatible with Islamic Sharia.
Conclusion:
AAVE is a decentralized finance (DeFi) cryptocurrency that allows users to lend and borrow in a decentralized manner. The supply of the coin is capped at 16 million coins, making it less than Bitcoin in terms of supply. While the coin offers some advantages such as fast interest-free loans, the use of the coin for interest-bearing lending and borrowing makes it non-compliant with Islamic law. Therefore, AAVE is not considered a halal coin.