Aave Cryptocurrency is just a year old on the Mainnet. Those who have been following Aave well have to state that it is good to go from $0 to $3B in less than a year. When looking at what is next for Aave in 2021, they have to state that it is about L2 scaling, real world back through, big partnerships and collaborations. There are several investors who are looking ahead with Aave trusting the protocol.
Recently, the Finnish mainstream got interested in the AaveAave Defi and they have published in this regard. Just looks like Aave is beginning to attract attention from users from across the world.
Aave users call themselves Aavengers. More of them will soon explore the innovative DeFi Lending from Aave. Recently, AIP-7 successfully passed the governance vote and is currently queued on time lock. So, lot of improvements might continue on the Protocol.
The Aave protocol is an open source and non-custodial liquidity protocol for earning interest on deposits and borrowing assets.
A liquidity pool is very important in a DeFi space. For clarity, liquidity is the ability of converting an asset to cash. So, practically people who have their value in Fiat convert it to digital asset/cryptocurrency. If they are not able to reconvert it to value when they need it for spending, it is not good. So, liquidity is important.
Users will be able to participate in the Aave Protocol either as depositors or borrowers. Depositors facilitate liquidity to the market. They deposit with the intention of earning passive income. Borrowers will be able to borrow either by over-collateralizing or under-collateralizing.
To use Aave it is important to understand the process. The good thing is that the Aave Protocol is able to be audited and secured.
This protocol being open source allows users to interact with the user interface client by making use of API or directly with the smart contracts on the Ethereum network. Since the protocol is open source it is possible for users to build any third-party service or application to interact with the protocol and to further enrich their product.
Top begin using the service, users simply deposit their preferred asset and amount. After depositing, they are able to earn passive income depending upon the borrowing demand in the market. Those who have deposited assets will also be able to borrow by using their deposited assets in collateral. The interest rates which users earn by depositing their assets will be used to offset the interest rate which they incur by borrowing.
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