With how many different crypto assets there are in the cryptocurrency investing space, it’s understandable to lack familiarity with every coin, token, or protocol. Due to the abundance of investment options, it can be a momentous task to familiarize yourself with every opportunity. That’s all in addition to understanding crypto and how it functions.
There’s a fantastic option for anybody looking to get into new crypto, and that project is Aave. A frequent guest on top lists of trusted experts’ favorite coins, it’s solid for first-time investors as well as crypto veterans.
If it’s your first foray into crypto, though, Aave is a little more complicated than other coins or tokens. We’ll take a quick look at what makes Aave tick and how it separates itself from the competition.
A Quick Rundown of the Aave Platform
You’ll often see terms like “DeFi” thrown around a lot in the cryptocurrency investing world. What does that mean in the case of Aave, though?
The term itself is a shorthand for decentralized finance. There isn’t a set-in-stone definition for what decentralized finance means, and depending on the token, you’ll get a different explanation. One common trait is that DeFi tokens and coins will often run on another blockchain.
In the case of Aave, it’s a token that fuels the lending system of their platform, running on the Ethereum blockchain.
Aave’s specialty is loans. It’s similar to a bank in end goals, despite the difference in execution. Instead of having paper contracts enforced by the bank, Aave uses “smart contracts.”
One of the biggest plusses of this service is that smart contracts don’t require any middlemen, thanks to the blockchain. On the financial side, they operate through funding contributed by participants depositing crypto into a shared pool.
Is Aave a Good Investment?
Not only does Aave function as a token, but it’s also the asset used for the loan transactions. One of the biggest questions for any crypto is what kind of use cases there are, and in the case of Aave, it’s built-in.
The “smart contracts” run various liquidity pools, with interest rates that are by Aave. The entire project is open-source, and there is complete transparency for both the lenders and the borrowers.
Thanks to the way that any deposit into Aave works, your stake will grow consistently. It means that deciding to buy Aave is an incredibly safe choice for earning reliable interest.
Crypto Assets That Keep on Giving
So many tokens, coins, and crypto assets have price volatility that borders on violence. It’s a relief to have one that is more dependable. Part of the benefit that Aave enjoys is having a use case, and that’s something we’re seeing more and more of in the crypto space.
If you want to keep track of other crypto trends and technology developments that could yield some lucrative returns, consider reading more of the blog. We regularly cover topics like this,
and more, that might help line your pockets with a little something extra.