Aave started its humble beginnings in 2017 when it’s initial coin offering (ICO) was run. At the time Aave was known as EthLend, this explains its current ticker symbol (LEND). Its ICO raised $16.2 million. Aave started out as a peer-to-peer crypto lending platform. It made sure that both ends of the deal fulfilled their capital promise. They later pivoted to become a lending pool where participants can borrow and lend crypto.
Aave can be compared to other lending protocols such as MakerDAO, Compound, yEarn, and Curve. As of August 8th, Aave has surpassed MakerDAO’s total value locked (TVL). MakerDAO has been the largest lending protocol for quite some time. Their protocol was intended to create a stablecoin that would maintain a 1-to-1 ratio with the U.S. dollar using only crypto. According to data provided by DeFi Pulse, Aave holds $1.44 billion in assets while its closest competitor has $1.43 billion.
On The Rise
Apart from providing an innovative liquidity protocol, Aave has many financial projects in the works that will push the DeFi ecosystem forward. They started to gain attention after their flash-loans were used to exploit decentralized exchanges’ (DEXs’) price differentiation. These exchanges were unaware of the potential that flash-loans had in the ecosystem and it was a shame it took an exploit for people to realize it.
Aave has recently announced its specifications for its version two. They are partnering with RealT, a real estate tokenizing company, to bring mortgages into DeFi. Now you’ll be able to take out a mortgage on a property by staking your crypto as collateral. This will truly compete with lending institutions by undercutting their interest rates. Its new version will also allow users to pay transaction fees using the GasToken smart contract. With Ethereum transaction fees being extremely expensive, Aave had to optimize for their users to be able to afford their transaction fees.
Eyeing $1 Billion
The Aave token, LEND, has seen relentless price rallies in the last 90 days. Market capitalization has been pushed to over $900 million. On August 25th we saw a 20% increase and up 160% for the month. As more and more LEND tokens are being locked up we can continue to see a shortage in supply. The next psychological barrier for investors is breaking that $1 billion mark.