Aave is one of the most popular protocols in the decentralized finance (DeFi) world. It works as a platform that facilitates lending and borrowing of cryptocurrencies. Thanks to this, users can earn passive income with their crypto assets or borrow whenever they need.
How Does Aave Work?
Liquidity Pools: Aave creates liquidity pools for different cryptocurrencies. Users earn interest by depositing cryptocurrencies into this pool.
Lending: Cryptocurrencies in the pool can be borrowed by other users. Borrowing users pay interest in return for the cryptocurrencies they borrow.
Collateral: Aave uses a collateral mechanism for borrowing transactions. In other words, if a user wants to borrow a certain amount of cryptocurrency, they must provide a higher value of cryptocurrency as collateral.
What is AAVE Token?
AAVE token is the governance token of the Aave protocol. Token holders have the right to vote on the future of the protocol. They can also get a discount on transaction fees on the platform.
Advantages of Aave
Decentralization: Aave is a completely decentralized platform. Thanks to this, transactions can be carried out without third-party intermediaries.
In summary
Aave is a protocol that has an important place in the cryptocurrency world and plays a leading role in the DeFi field. It offers attractive opportunities for both individual and institutional investors. However, as with any investment, it is important to do detailed research and consider the risks before investing in Aave.
