AAVE is the governance token for the Aave protocol (replacing the LEND token at 100:1).
AAVE is used for
- Staking for security of the protocol
How could value accrue to AAVE token?
- Holders receive rewards and cash flow from fees by locking and securing the protocol
Fees & rewards
- Rewards in AAVE from staking in the Safety Module
- Trading fees from the protocol to stakers
- BAL Tokens + trading fees from ETH/AAVE Balancer pool tokens
What is Aave?
Aave is a protocol for lending and borrowing on Ethereum.
- Lenders supply assets to liquidity pools.
- Borrowers deposit collateral greater than their loan amount to borrow from the liquidity pool.
Depositing any token or ETH generates aTokens (for example aETH).
- aTokens are interest-bearing and are minted and burned upon deposit and withdraw.
- aTokens’ value correspond to deposited asset at a 1:1 ratio.
- Can be stored, transferred or traded.
- All interest collected by the aTokens reserves are distributed to aTokens holders directly by continuously increasing their wallet balance
Current interest rates are visible the site.
- Yield & Collateral swap – Swap between any collateral in the protocol. Useful for avoiding liquidations when price of an asset goes down.
- Repayment with collateral – repay loans in 1-click.
- Flash liquidations – Batching, liquidate loans without capital and more.
- Debt Tokenization – Enables credit delegation.
- Credit delegation – Delegate collateral to enable undercollateralized loans. Use for example OpenLaw for the loan agreement.
- Gas optimization – 50%
- Stable & Variable Rate Borrowing – Switch between rates.
Aavenomics is a governance framework to AAVE tokenholders.
- A Safety Module (SM) for staked AAVE to act as collateral of last resort.
- Delegate collateral for undercollateralized loans
- Governance defines a set of Policies for parameters of Aave.
Governance is implemented through on-chain Aave Improvement proposals (AIP) and discussed in the governance forums.
AAVE token issuance
Total supply: 16 million
- LEND migration: 13 million – LEND swapped in October 2020 to AAVE at a rate of 100:1 (81.25%)
- Treasury fund: 3 million to the “Aave Ecosystem Reserve”, which will reward future ecosystem participants (18.75%)
Original LEND issuance
- Total supply: 1 300 000 000
- ICO: 1 000 000 000
- Median price: $0.0162 ($1.62 in AAVE)
- Founders and Development: 300 000 000 (24 months vesting)