How to Invest in AAVE
As the total value locked up in DeFi liquidity pools continues to rise, many crypto enthusiasts are starting to consider the possibilities of its mainstream adoption.
For most of the DeFi tokens that are currently circulating the markets - this fundamentally comes down to utility. And Aave has been on the cutting edge of DeFi in this regard for some time now.
If you are thinking of how to invest in AAVE, then our guide will take you through everything you need to know. We will discuss why this token might be a good addition to your crypto portfolio and how you can invest in AAVE through a regulated crypto broker.
- How to Invest in AAVE in 5 Easy Steps
- How Does the Invest in AAVE Process Work?
- Why Should You Invest in AAVE?
- How to Invest in AAVE - Various Options Available
- How to Choose a Platform to Invest in AAVE
- How to Invest in AAVE Today - Step-by-Step Walkthrough
- How to Invest in AAVE - The Bottom Line
How to Invest in AAVE in 5 Easy Steps
For those who are completely new to the investment space, the thought of buying cryptocurrencies like AAVE can be an overwhelming prospect.
So, let us give you a quick overview for you to understand how easy the process can be.
To invest in Aave, the first step is to open an accout with a regulated exchange, depost funds, select AAVE from the platform list, and lastly confirm that the coins have added to your Wallet.
When thinking about how to invest in AAVE - you will need to follow these five steps:
Step 1: Choose a regulated crypto provider that can give you access to AAVE.
Step 2: Create your online investment account and deposit funds.
Step 3: Choose AAVE from the list of available assets.
Step 4: Enter the amount you wish to invest in AAVE.
Step 5: Once the purchase is complete, withdraw your AAVE tokens and store them in a safe crypto wallet.
If you choose a regulated broker like eToro - the last step will be even easier. Since the platform offers an in-built wallet, you will not have to withdraw them at all.
Instead, your AAVE tokens will be stored in a much safer way, with the broker monitored by the financial authorities that regulate it.
Now that you have got an idea of how everything works - let us consider how you can make successful AAVE investments from the comfort of your home.
How Does the Invest in AAVE Process Work?
Before investing your money into an asset, you should clearly understand what factors affect its market price.
Speaking of cryptocurrencies like AAVE - there are several forces in play. This ranges from the adoption of blockchain technology, the decentralized finance sector, regulations, general market interest, and more.
All of these drivers come down to one aspect - the supply and demand in the market.
For example, if more investors are looking at how to buy AAVE than those willing to sell, then the price of this DeFi token will go up.
Inversely, if the market has more sellers than buyers, the value of AAVE will go down. Since AAVE has a finite supply, any increased popularity can drive up prices further.
If the value of AAVE tokens goes up after you make the investment - then you will make a profit.
Let us demonstrate how this will work with a practical example:
- Let's imagine that you are ready to invest $1,000 in AAVE for the long term.
- At the time of investing - the price of AAVE is $200.
- After two years, the price of AAVE has increased to $500.
- If you sell your AAVE tokens at this price, you will be making a profit of 150%.
- This means that on your $1,000 investment, your profit would amount to $1,500.
Now, as you can imagine - the key is to find the right market opportunity to sell your AAVE tokens. If you do, you might be able to make attractive returns on your investment.
Before you wonder whether such a price increase is even possible, let us tell you that the value of AAVE has increased by over 300% since it was launched.
That being said, your ability to make profits from AAVE will depend on your investment strategy, risk appetite, and how you time the markets.
Why Should You Invest in AAVE?
If there is one thing that is valid across all assets - it is that you cannot always make investment decisions based on the past performance of the instrument. Here are some factors associated with AAVE that will help you reach a decision on whether or not this DeFi token is worth buying.
AAVE is an Established DeFi Platform
For those unaware, AAVE is primarily a crypto lending protocol. And it is one of the first DeFi platforms to offer this solution. It eliminates the need for a middleman by connecting lenders directly with borrowers.
The platform utilizes smart contracts and facilitates direct links for lenders to earn more and borrowers to pay less interest. Moreover, the AAVE token is used to incentivize its users.
This utility gives AAVE an edge over other DeFi coins that are competing to become an alternative to fiat currencies.
AAVE is already enjoying a large market cap. Alongside the growth of DeFi, the Aave ecosystem is also expected to grow - thanks to its unparalleled transparency.
AAVE Has a Large Market Cap
Before investing in cryptocurrencies, investors tend to consider the chosen project’s market cap. This is the number of tokens that are in supply at any given time - multiplied by the current market value.
A large market cap indicates that the investment is relatively safer compared to low-cap coins. In that regard, with over $2 billion in circulation. AAVE can be considered a solid digital asset to invest in.
This digital token has an established market - where it is highly valued and actively traded.
Even with the volatile nature of cryptocurrencies, a large market cap can help sustain price fluctuations for a longer period than those with a lower valuation.
AAVE is Constantly Improving
Many cryptocurrency projects that are launched these days do not thrive in the market due to a lack of developmental upgrades. Once they raise funds via their ICO, they disappear from the market or stay dormant without any practical usage.
In the case of AAVE, this couldn’t be further from the truth. Its utility ensures that the platform and native token is constantly updated. It has strong development goals, and the team behind the network is providing crypto enthusiasts with better services.
Such projected developments make AAVE an attractive asset for long-term investors.
AAVE has a Fixed Supply
Any financial asset with practical usage and a limited supply is likely to gain in value over time.
As we have established already, AAVE is attractive in terms of its practicality. In addition, it also has a finite supply of 12.78 million tokens. Over the years, when the scarcity of the coin increases - it will have a positive impact on its price.
That is, of course - given that the AAVE lending platform continues to perform well in the DeFi market.
Altogether, the current standing of AAVE - at $203.48 per coin (at the time of writing) bodes well for long-term cryptocurrency investors. If the lending protocol is to maintain its popularity, the price of AAVE might also rise - allowing you to make a profit along the way.
How to Invest in AAVE - Various Options Available
There are a few ways to go about investing in crypto assets like AAVE. In this digital-savvy world, you will have no trouble finding an online platform that can give you access to this emerging DeFi token.
However, when thinking of how to invest in AAVE - you will need to choose a crypto provider that best fits your needs. The first step to do that is to fully understand your options for investing in AAVE online.
The most common type of AAVE provider that you will come across is a cryptocurrency exchange. These platforms allow you to trade and invest in crypto assets with ease.
To the untrained eye of a new crypto investor - these platforms might appear like the go-to method for accessing AAVE. However, the truth is that the majority of these cryptocurrency exchanges are unregulated.
In other words, these platforms are not licensed by any financial authority. In case of any misconduct, there will be no governing body you can approach or no insurance you can claim for the recovery of your investments.
Moreover, for the very same reason - you will not be able to fund your AAVE investments using fiat currency. The only way to purchase AAVE via such unregulated crypto exchanges is to swap it for another digital asset.
This means that you will first have to procure another cryptocurrency such as Bitcoin or Litecoin to buy AAVE.
The hassle does not end there. Once your investment is completed, you will be required to move your AAVE tokens to an external digital wallet for their safekeeping.
Then again, you will have to perform the same process in reverse at the time of selling. Overall, the process of investing in AAVE via a cryptocurrency exchange can be overwhelming, especially for an inexperienced investor.
The second and the most convenient alternative is to access AAVE via a regulated crypto broker. As you can imagine, the main aspect that differentiates regulated brokers is compliance with one or more financial authorities.
As such, you will have the ease of buying AAVE directly using your preferred fiat payment method. On platforms such as eToro - you will even have access to an integrated digital wallet service at no extra cost.
This means that there is no need for you to withdraw your AAVE coins to another digital wallet. Rather, you can leave them in the hands of a regulated broker - knowing that it will be safe under the watchful eyes of financial authorities.
Put differently, you will not have to perform the rigmarole of transferring your AAVE tokens back and forth whenever you make an investment or are looking to cash out. Instead, everything can be completed from within your portfolio dashboard.
More importantly, this convenience does not mean that you have to compromise on safety or broader investment features. The best-regulated brokers such as eToro will also give you access to educational resources, regular market analysis, and even portfolio management services.
All in all, it is fairly obvious why you might want to consider a regulated AAVE broker instead of an unlicensed cryptocurrency exchange.
How to Choose a Platform to Invest in AAVE
Now that you are aware of the many reasons to stick with a regulated crypto broker - let us tell you how you can find one.
When thinking of How to Invest in AAVE - a simple internet search will provide you with dozens of options. However, you need to have clear criteria in mind in order to choose a platform that can best fits your needs.
In this section, we will discuss what aspects of a broker you need to consider before creating an investing account.
Licensing and Reputation
If there is one point that you should not compromise on - it is the regulatory status of the broker. Your chosen brokerage platform must be licensed by a respected financial authority.
That said, it is possible for a crypto broker to be regulated by more than one governing body.
For instance, take the case of eToro. This regulated broker is licensed by three governing bodies in multiple jurisdictions - the FCA in the UK, ASIC in Australia, and CySEC in Cyprus. This extensive regulation means more protection for both your investment funds and assets.
Now, if you are wondering why regulation is so important - it means that a licensed broker has to abide by the guidelines set by the respective financial authority.
For instance, some of the most common rules set by governing bodies include - keeping client funds in segregated bank accounts and regularly submitting the platform's trading records for auditory purposes.
In addition, regulated brokers are also required to verify the identity of all registered users and to be transparent about the risks of crypto investments.
As you can see, such measures can make a significant difference in how a broker conducts its business and protects its clients such as you.
Even if a broker can give you access to all kinds of attractive features, a lack of regulation is a clear indicator that you should look elsewhere to invest in AAVE.
Fees to Invest in AAVE
Many beginners are unaware of the importance of fees when considering how to invest in AAVE.
In a nutshell, the fee structure of your chosen broker can dictate how much profit you can keep for yourself.
For example, let us suppose you are investing in AAVE through the popular cryptocurrency exchange Coinbase. As per the platform's fee structure, an investment of $100 will cost you a commission of 1.49%. This means that you will be paying $1.49 when you buy AAVE.
Later, at the time of selling - if your AAVE investment is worth $200, your commission will be $2.98.
In comparison, over at eToro - there is no commission for investing in AAVE or any other cryptocurrency.
In addition, you might also have to pay transactional fees to process your payments on the platform. To give you an idea, funding your account through a debit card will cost you a 3.99% fee on Coinbase.
While at eToro - there are no deposit fees charged unless you are funding in a currency other than USD. Even then, transactional charges are limited to 0.5% for non-USD deposits.
As you can see, if you are not careful, the fees you pay to your online broker can add up to a monumental sum over the years.
Minimum AAVE Investment and Payments
When you search for your ideal AAVE broker, another thing to make sure of is that the platform has set a low minimum investment amount for cryptocurrencies.
For example, at the time of writing, on June 24th, 2021 - AAVE is priced at $203.48. This means that you will need to invest over $200 in order to buy a single AAVE token.
Depending on your investment strategy and available capital. - this might be a high amount to invest in a single digital asset.
On the other hand, if you choose eToro - you can start investing in AAVE from only $25. This lets you gain exposure to this asset without having to risk a hefty amount.
As you can see, a crypto broker with a low minimum investment amount can be advantageous for investors in many ways.
Alongside, you should also look into what payment options are supported by the brokerage platform. Some brokers allow you to fund your account through quick and convenient debit or credit card transactions.
Some also allow you to pay via e-wallet services like PayPal. Whereas on others, you might have to resort to a traditional wire transfer method.
Your convenience of using a specific AAVE broker will depend to a large extent on how easily you can transfer funds to and from the platform.
Storage and Cashing Out
Throughout our How to Invest in AAVE Guide, we have mentioned that you might want to consider an external digital wallet - depending on your chosen crypto provider.
Let us explain this further. When you are investing in AAVE to hold for the mid to long term, you should seriously consider the safe keeping of your coins.
In the crypto space, it is typical to get a digital wallet for this purpose. However, there are hundreds of storage options out there with varying levels of security.
It can be extremely challenging for a beginner investor to know which one of these wallets can be trusted with your crypto assets.
Alternatively, a regulated broker like eToro gives you access to an in-built wallet, where you can store your AAVE tokens within your portfolio. This means - when you are ready to cash out your investment - you can do it directly through the brokerage platform.
There will be no need for you to transfer in your AAVE coins or exchange them for another cryptocurrency. Instead, you only have to locate AAVE within your eToro portfolio and click on 'Sell.'
You will be able to make a withdrawal request back to your payment method.
How to Invest in AAVE Today - Step-by-Step Walkthrough
Our How to Invest in AAVE Guide has given you a basic understanding of everything you need to get started.
To complete this guide, we will take you through a step-by-step outline of how you can make AAVE investments using eToro.
Step 1: Open an Account
Singing up on eToro is quite simple. You will first need to open an account using your email address. After that, you can set your desired username and create a strong password.
To complete your account registration, you will also have to provide some basic personal information - think in terms of your full name, address, and contact details.
In addition, eToro will also ask you a number of questions to evaluate your experience with cryptocurrencies and investments in general.
Step 2: Provide Some ID
Being a regulated broker, eToro will require you to complete a KYC process to finish your account verification.
This means you will have to offer documentation that proves your identity and your country of residence. You can provide a government-issued ID for the former and a recent utility bill or bank statement as your proof of address.
This step is automated, and you will receive a notification via email letting you know whether your account has been verified.
Step 3: Make a Deposit
Funding your AAVE investment can be done by depositing cash from a personal bank account of your name.
In addition, on eToro - you will also be able to make deposits by paying through a debit card, a credit card, or an e-wallet like PayPal, Neteller, or Skrill.
Step 4: Search for AAVE
On eToro, you will be able to find AAVE under 'Trade Markets.' You can also simply visit the AAVE trading page by searching for the cryptocurrency.
Step 5: Complete AAVE Investment
Once you are on the correct trading page, you can proceed to specify whether you are looking to buy or sell AAVE tokens.
As you want to make an investment, you can select 'Buy' and then enter the amount you want to buy.
Make sure that you check all your selections before clicking on 'Open Trade' to confirm your investment.
You will find your AAVE coins added to your eToro portfolio soon after the investment is complete.
Step 6: Cash Out Your AAVE Investment
Cryptocurrency markets can change in a matter of seconds - often faster than forex.
As such, you should keep an eye on your AAVE investment to make a move if you come across a profitable opportunity.
On eToro, cashing out your AAVE investment is easier than making a purchase. You only have to find AAVE in your eToro portfolio and click on the 'Sell' button - which you will find on the right-hand side.
The broker will immediately cash out your investment - and the proceeds will be ready for you to withdraw.
How to Invest in AAVE - The Bottom Line
In a short time, the AAVE lending platform has become very popular in the DeFi industry. Its success is very well reflected in the value of its native AAVE token.
If you want to start investing in AAVE, the best way to do so is through a regulated crypto broker. This is necessary to ensure the protection of your investment as well as for the overall convenience of depositing and withdrawing funds.
Moreover, if you choose eToro - you will also be able to access thousands of cryptocurrencies like AAVE on a completely commission-free basis.
eToro – The Best Platform to Buy Aave
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
How much can I earn by investing in AAVE?
The amount of money you can make from AAVE will depend on your stake and the timing of your investments. It is strongly suggested that you thoroughly study the market before putting money into this digital asset.
How do I start investing in AAVE?
There are several methods for you to invest in cryptocurrencies like AAVE. However, the easiest path would be through a trusted and regulated online crypto broker like eToro. Aside from offering commission-free access to the AAVE market, the platform also allows you to store your AAVE tokens for free in its digital wallet.
Is AAVE a good long-term investment?
The price of AAVE tokens has performed exceedingly well in the past. However, historical data cannot accurately predict the future performance of the AAVE market. Therefore, you should always risk only what you can afford to lose on this digital asset.
Where should I store AAVE tokens?
Cryptocurrencies like AAVE have to be stored in a secure digital wallet. By choosing eToro as your regulated broker - you will have free access to its in-built wallet services, allowing you to keep your AAVE tokens in a safe location monitored by multiple financial authorities.
Is there a minimum amount needed to invest in AAVE?
The minimum investment required will depend on your chosen AAVE broker. eToro gives you the option to invest in cryptocurrencies from an amount of $25 or higher.