AAVE is a DeFi blue chip and their ability to bounce back from a tough year. Aave is one of those projects, and one that virtually everyone in crypto is aware of.
2023 is a fantastic year of consolidation, after the previous years. Let’s see its history and what the chart, its price, can do in the long term.
Aave is one of the core DeFi layers for the entire ecosystem. Their main product is a neobank, users deposit funds which others can borrow. However, Aave’s strategy targets a much larger goal — creating the Aave super-app. Aave has expanded to seven different chains, has released a market for AMM tokens, a social network, and has even built cross-chain signaling into their backend.
2017 – Inception: Aave was founded by Stani Kulechov under the name “EthLend.” The initial goal was to create a decentralized lending platform that would allow users to lend and borrow cryptocurrency assets without intermediaries. This laid the foundation for what would later become the Aave protocol.
2018 – Initial Development and ICO: The EthLend team worked on developing the platform, focusing on creating a user-friendly interface and secure smart contracts. In November 2017, EthLend conducted an Initial Coin Offering (ICO) to raise funds for further development.
2019 – Rebranding to Aave: In September 2018, EthLend underwent a rebranding and transformed into Aave. This rebranding marked a strategic shift towards a broader vision of a decentralized financial ecosystem. The name “Aave” was chosen to reflect the idea of transparency and accessibility, aligning with the protocol’s goals.
2020 – Aave V1 Launch: In January 2020, Aave launched its first version (V1) on the Ethereum mainnet. This marked the protocol’s official entry into the DeFi space, offering users the ability to lend and borrow a range of cryptocurrencies through smart contracts.
Flash Loans Introduction: One of the defining moments in Aave’s history occurred with the introduction of Flash Loans in January 2020. This groundbreaking feature allowed users to borrow assets without collateral, as long as the borrowed funds were returned within a single Ethereum transaction. Flash Loans quickly gained attention for their potential use in arbitrage and innovative DeFi strategies.
Liquidity Mining and Governance: Aave V2, launched in December 2020, introduced liquidity mining and governance features. Users could stake their AAVE tokens to earn rewards and participate in protocol decisions through governance proposals and voting.
Expansion and Integrations: Aave’s popularity continued to grow throughout 2020 and 2021, leading to numerous integrations with other DeFi platforms and services. These integrations helped expand Aave’s reach and accessibility within the broader DeFi ecosystem.
Aave Arc and Institutional Interest: In March 2021, Aave introduced “Aave Arc,” an initiative aimed at exploring scalability solutions, including layer 2 protocols. This demonstrated Aave’s commitment to adapting to the evolving needs of the DeFi space. Additionally, Aave began attracting interest from institutional players seeking exposure to the DeFi sector.
Aavenomics: In July 2021, Aave underwent a significant upgrade known as “Aavenomics.” This upgrade introduced improvements to the tokenomics of the AAVE token, including a migration to a new governance model and enhanced staking mechanisms.
Ongoing Development: As of the time of writing, Aave continues to be an active and evolving project, with ongoing developments, collaborations, and enhancements to its protocol. Its impact on the DeFi ecosystem remains substantial, inspiring further innovation and reshaping the landscape of decentralized finance.
Aave (July 2023) implements the GHO stablecoin on the Ethereum mainnet.
How does Aave’s GHO stablecoin work?
The GHO stablecoin is backed by Ethereum (ETH): Aave issues it as an overcollateralized loan. This method involves users collateralizing crypto assets above the value of the amount they are going to borrow.
Lending and Borrowing Pools: Aave operates through a system of liquidity pools, where users can deposit their assets as collateral and earn interest, or borrow assets against their collateral. These pools are designed to provide efficient access to funds for both lenders and borrowers while ensuring competitive interest rates.
Variable Interest Rates: Unlike traditional finance, Aave offers dynamic interest rates that adjust in real-time based on supply and demand conditions within the protocol. This approach helps in maintaining stability and offers a more responsive experience for users.
Flash Loans: One of Aave’s most innovative features, Flash Loans allow users to borrow assets without any collateral, as long as the borrowed funds are returned within a single Ethereum transaction. This functionality has opened up opportunities for arbitrage, collateral swapping, and complex DeFi strategies.
Governance and Staking: Aave token (AAVE) holders can participate in protocol governance, proposing and voting on changes to the protocol’s parameters. Additionally, users can stake their AAVE tokens to earn rewards and participate in the decision-making process.
Interest Rate Swap: Aave introduced the concept of Interest Rate Swaps, which enables users to switch between fixed and variable interest rates on their existing loans. This feature provides users with more control over their borrowing costs and risk exposure.
Benefits and Impact
Accessibility: Aave democratizes lending and borrowing by providing open access to financial services without intermediaries. Users from around the world can participate in the DeFi ecosystem, even without a traditional banking infrastructure.
Innovation: Aave’s introduction of Flash Loans and Interest Rate Swaps has spurred innovation in the DeFi sector. Flash Loans, in particular, have enabled developers to create novel financial products and execute complex strategies that were not possible before.
Efficiency: Through its automated and decentralized protocol, Aave reduces the need for intermediaries, streamlining the lending process and reducing associated costs.
Global Impact: Aave’s borderless nature has made it possible for individuals in underserved regions to access loans and earn interest, potentially disrupting traditional financial systems.
The chart, past
Really impressive, since after its departure it began to rise but stopped and began to fall to areas of 0.32 USD and from there, and in 2 years, reached incredible areas of almost 700 USD. The investment in AAVE in these two years has really made more than one person a millionaire.
But then, what happened, and what could happen next?
We will assess your price, in real time.
The chart, now
Technical analysis is not an exact science, but it gives a lot of information about what could happen, and without a crystal ball, trying to see possible futures for the price.
After its ATH (historical maximum), the price began to decline, where and from the current zones it seems to react as a zone of great accumulation in the last year.
In the following chart, we also see a possible triangle that, if broken upwards, would therefore initiate a new long-term bullish movement, perhaps returning to its ATH and beyond. Time will tell, but it seems that he is preparing it.
As I always say, DYOR, do your own research, but that doesn’t mean that as a blue chip, AAVE should be one of the safe bets.
Good luck with your investment decisions.