Wondering if now is the right time to buy AAVE? Or maybe you are unsure if AAVE is safe to invest in?
If you have heard about the boom in decentralized finance which has made you a novice to AAVE investing, you may wonder as to whether Aave is a good investment. You may have asked another question such as should I Invest in AAVE?
Although a thorough analysis needs to be conducted before the two questions can be answered, Aave is likely a good investment, and investing in AAVE could bring you enormous returns.
AAVE has increased substantially in 2021. Several analysts based on fundamental and technical assessments think the Aave coin has plenty of room for growth and that investing in AAVE is one of the best financial decisions you could make in 2022 with an eye on the long term. Therefore, now that AAVE is recovering from June's lows and constant regulatory pressure on digital assets could be the right time to invest in Aave (AAVE).
In this article, we are going to break all Aave-related myths that are circulating on social media. This will help you decide if you should consider investing in AAVE.
If you want to invest in AAVE easily and quickly, check out eToro!
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
- What Is Aave? A Simple Explanation
- Is AAVE A Good Investment?
- Should I Invest In Aave?
- Should I Invest In Bitcoin Or Aave?
- How Much Could AAVE Be Worth?
- Who Should Include AAVE In Their Portfolios?
- Is Investing in AAVE Risky?
- Does Aave Have a Future?
- Conclusion: So, Is AAVE a Good Investment?
What Is Aave? A Simple Explanation
Aave is the first decentralized finance application ever developed. It was created before the existence of decentralized finance.
Aave is an Ethereum-based money market whose native governance token is AAVE. It allows users to borrow and lend a range of digital assets, including stablecoins and altcoins. The Aave Protocol is managed by AAVE token holders. AAVE holders have the exclusive right to debate as well as cast votes on proposals that affect the course of the Aave project.
The inception of the Aave Protocol can be traced back to the fall of 2017. After being left frustrated at the lack of decentralized lending platforms on Ethereum which had enabled smart contracts on its blockchain, founder Stani Kulechov and his team of developers launched ETHLend in November 2017. The whole idea was to allow users to post requests for loans and then lenders would provide the liquidity for the transactions to be completed.
As the years progressed, the concept of ETHLend lost its grounding due to new and improved protocols by other developers. This was attributed to the difficulty in matching the requests for loans with liquidity offers. Stani Kulechov and his team of developers decided to overhaul the whole project and re-launch ETHLend as Aave at the start of 2020.
But how does Aave Work?
Conceptually, Aave is similar to ETHLend. This means they enable users of the Ethereum Network to receive loans and profit from lending their assets out. However, there are fundamental differences between Aave and ETHLend.
Currently, Aave is an algorithmic money market. Loans are collected from a pool instead of individually matching them to a lender. Interest rates paid are determined by the utilization rate of assets in a particular pool. Normally, there is a spike in interest rates when all pools are used up. This entices more liquidity providers to deposit more capital.
Too much bureaucracy in centralized finance has led to a rise in decentralized finance. This has given birth to Aave and a host of decentralized lending platforms.
AAVE Investing: Getting Started
To start investing in Aave you first need to register online with an exchange that will allow you to buy and invest in AAVE. For starters, an exchange is an online trading platform that enables traders to buy and sell assets such as AAVE as well as other cryptocurrencies.
Trading Education would like to introduce eToro as the exchange of choice for your trading and investing activities. eToro added AAVE on 27th May 2021 due to high investor demand.
Investing in AAVE can only happen if you follow the steps below.
STEP ONE involves SIGNING UP. Kindly provide details of your full legal name, phone number, residential, and email address. You should note that your email and phone number play an essential role in the initial phase of the verification process.
STEP TWO involves VERIFYING YOUR ACCOUNT. Under this phase, you would be made to upload a government-issued identification card (national ID or drivers’ license). This is part of a process called Knowing Your Customer (KYC). Normally, the verification process takes up to 24 hours. The process can be completed in a short period if your signature is embossed on the card. In extreme cases, you would be made to upload a bank statement that confirms your residential address. This helps prevent identity, credit, and debit card fraud. eToro has served millions of customers over 15 years without incident and considers this process highly essential.
STEP THREE involves DEPOSITING FUNDS. Without fiat currencies, you cannot buy AAVE. In a range of options, you can upload an amount of money set aside for risking on digital assets.
STEP FOUR involves NAVIGATING TO AAVE’S PAGE. Under this page, you purchase several AAVEs that fit your investment budget. Normally, you should start by risking 5 to 10% of your budget. Once you order your purchase, within minutes, the transactions will be processed and completed. Your AAVE coins will then appear in your account.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Is AAVE A Good Investment?
As a top 50 digital asset, many crypto analysts and experts believe that AAVE is a good investment compared to other decentralized finance coins and mainstream cryptocurrencies. Despite all the ups and downs in Aave’s history, analysts project AAVE’s price could grow further in the long term.
AAVE is developing into one of the largest cryptocurrencies globally. This is due to partnerships with some large companies and the social acceptance of Aave. The price will continue to rise because more people are investing in cryptocurrency. There is a strong team behind the project. The success of cryptocurrencies is heavily dependent on the team behind the project’s roadmap. With 17,085 cryptos running on 457 exchanges, Aave is benefiting from the continuous development of the protocol and its novel token.
One of the drivers behind AAVEs potential increase in price is attributed to the feature of the flash loan. Aave changed the decentralized lending game in its favour when it introduced flash loans to the saturated market. Without collateral, Aave’s open-source protocol allows users to take out quick loans. It must be noted that flash loans must be paid back by the time the next Ethereum block has been mined. This helps users who need a certain amount of money to accomplish a financial task within short periods. This explains Aave’s dominance in daily unique borrowers. As per data retrieved from Dune Analytics, at the time of writing, Aave had 172 daily unique borrowers compared to 21 for Compound and 23 for MakerDAO.
At the time of writing, AAVE was trading at $87.
Coinpedia thinks AAVE is a good investment in the future. “Hence with significant upgrades in its interoperability, the QNT price would rise the tide up to $728” in 2025.
TradingBeasts has made bullish predictions about the price of AAVE in the future. According to the experts, AAVE could command a maximum price of $105 by the end of 2022. By the end of 2023, AAVE is estimated to trade at $138 and to reach a high of $230 in 2025.
Aside from Coinpedia and TradingBeasts, other analysts have also forecasted prices with the minimum being $200 for AAVE in the next 3 years.
Should I Invest In Aave?
Why should I consider investing in AAVE? Well, AAVE is a governance token for an innovative technology that can change how people go about their lending and borrowing activities. Precisely, AAVE’s issuing authority has introduced decentralized lending and instant loans that allow borrowers to find money easily and lenders to make consistent passive income without any traditional financial systems.
AAVEs price will rise sharply in the future according to many experts. This is because of the rising nature of the crypto market in general. More people are getting to know cryptocurrencies day by day. Most of them would be extremely happy to find out that Aave is a non-custodial protocol. What this means is that the protocol never holds your cryptocurrency directly. You retain ownership of your digital assets. This bodes well for users who are afraid of being victimized by hackers. Aside from this, Aave is highly decentralized. This means that you can create an account without going through the normal procedures of a commercial bank. Within minutes, you can set up an Aave account and go about your trading and borrowing activities.
Such expected usage of the protocol is why Crypto Friends believes Aave coin’s price will increase substantially in 2022 and beyond. According to analysts at Crypto Friends, a rise of 100% to 200% over 2022 to 2025 is not a crazy idea. Analysts at Digital Coin Price have also estimated AAVE to reach $107 by the close of 2022 and settle at $340 by the end of 2028.
With more assets to choose from such as USD Coin (USDC), True USD (TUSD), Dai Stablecoin (DAI), Tether (USDT), Binance USD (BUSD), Synthetix USD (sUSD), Basic Attention Token (BAT), ETHLend (LEND), Kyber Network (KNC), Ox (ZRX), Ethereum (ETH), Decentraland (MANA), Chainlink (LINK), Maker (MKR), Wrapped Bitcoin (wBTC), Synthetix Network (SNX) and Augur (REP), increased user activity will soon befall Aave.
Thriving on the feature that allows users to borrow money in a cryptocurrency other than the one they deposited, Aave users have a range of assets that would meet their lending and borrowing needs.
Check Out: Could Aave Be A Millionaire-Maker Coin?
Should I Invest In Bitcoin Or Aave?
AAVE is the 44th largest digital asset in the world. Based on its relatively lower price of $87, there are several reasons to invest in AAVE instead of Bitcoin. Trading on the downside, AAVE is backed by a protocol that has a high liquidity ratio, uses oracles to provide real-time data, has a selection of assets to choose from, compatible with several hardware wallets, and comprises a team of dedicated developers. Aside from this, the protocol has the highest total value locked, brought huge returns to investors in 2021, continues to form successful partnerships, and has also embraced layer 2-scaling technology with Polygon that helps it scale relatively faster than other DAPPS on Ethereum.
On the other hand, Bitcoin (BTC) plays two roles, a transactional currency and a store of value. As a transactional currency, it’s integrated with millions of merchants. In the last 24 hours, BTC has been involved in 218,227 transactions worth more than $3.59 billion. The count on transactions could go up if BTC could find a solution to its relatively lower processing speed. Bitcoin’s price of $19,300 makes it a financial instrument for investors with huge capital to risk.
Will AAVE Ever Overtake Bitcoin?
AAVE could get as high and may even overtake BTC someday due to the unpredictable nature of cryptocurrencies. As of the time of writing, AAVE has a trading price of $87 which is 221 times below the trading price of BTC ($19,300). Bitcoin is a mainstream cryptocurrency while AAVE is a decentralized finance coin. In the last 24 hours, AAVE recorded a trading volume of $174 million while BTC recorded a trading volume of $34 billion. AAVE has a market capitalization of $1.2 billion and BTCs market capitalization stands at $370 billion.
From the statistics above, we can conclude that AAVE has a lot of miles to cover before it can reach BTC status in terms of price, trading volume, and market capitalization.
Bitcoin (BTC) thrives on the announcement of new companies accepting it as an option of payment and new major investments as drivers of its price having been listed on the top cryptocurrency exchanges globally. On the other hand, AAVE currently thrives on new exchange listings and major upgrades to its network before it can go up.
Despite the plunge and plummeting of BTCs price, it’s still forecasted to reach new price milestones before the end of 2022 and beyond. Coinpedia forecasts Bitcoin to reach a new all-time high of $124,159.23 by the end of 2025. The same forecasting portal estimates AAVE to reach a new all-time high of $542.9 by the end of 2025.
With predictions like that, it looks impossible for AAVE to get as high as BTC or surpass it in the short and long term.
How Much Could AAVE Be Worth?
According to Digital Coin Price, AAVE could be worth $159 by the close of 2023 and by the end of 2024 tests $203. The experts estimate AAVE could have a trading price of $264 by the end of 2026.
According to Coin Price Forecast, AAVE could be worth $157 by the end of 2023 based on the rising nature of decentralized finance in the world. The experts believe AAVE could command a price of $168 (2024). In the long term, based on the increased use of decentralized lending platforms, AAVE could trade for prices of $225 (2026), $345 (2029) and $403 (2031).
According to Priceprediction.net, the governance token behind the decentralized lending platform could trade for the best possible price of $161 by the year’s end of 2023. The experts think AAVE could command the best possible prices of $246 by the close of 2024, and $459 by December 2026.
According to CryptoNewsZ, the average price AAVE could reach by the end of 2023 is $224. According to the experts, AAVE is likely to test $241 in 2024.
How Much Could AAVE Be Worth By The End Of 2025?
According to Digital Coin Price, AAVE could trade for a coin at $249 by the close of 2025.
According to Coin Price Forecast, AAVE could command a price of $175 in the middle of the year and trade for $184 by the end of 2025.
According to Priceprediction.net, AAVE could have a trading price of $340 by the end of 2025.
Based on millions of people being educated on the possibilities of DeFi and lending protocols, CryptoNewsZ expects AAVE to test the $335 mark by the end of 2025.
How Much Could AAVE Be Worth In 2030?
According to experts at Coin Price Forecast, AAVE could be worth $383 by the end of 2030.
Don't Miss: Aave Price Prediction Forecast
Will AAVE Go Down In 2022?
NO! AAVE will not go down in 2022. Whatever happens, AAVE is a crypto trading asset and therefore unstable in its price history. There will be unavoidable dips in 2021 and beyond. Once assets reach new high lows, to experienced investors, it provides a great opportunity to buy.
This is why AAVE’s current price of $87, 86% less than its all-time high price of $666.86 recorded on 18th May 2021, has not stopped investors from making bullish predictions. According to Trading Beasts, AAVE could trade for a coin at $146.16 as the average price and $214.94 as the best possible price by the end of 2022.
Another factor why AAVE is not going down can be attributed to the new partnership and exchange listing. On Wednesday, 26th May 2021, AAVE was listed on WIREX, a digital payments platform. According to prnewswire.com, "With many arguing this year will be another extraordinary year for DeFi, the listing of these ERC-20 tokens marks a pivotal point in solidifying Wirex’s vision to democratize access to the benefits of crypto.”
But why is this partnership important for the survival of AAVE in 2022? Users of Wirex can in a seamless and trustless manner buy, hold, exchange and, spend AAVE with their contactless Wirex card at more than 61 million locations globally. Many people will get to ask questions about what AAVE as a cryptocurrency and its protocol Aave is. With time they will see the benefits of using the decentralized lending platform. Once the user base increases, more upgrades will be needed to increase the efficiency of the protocol. More COMP will be purchased to be able to allow holders to partake in governance decisions. In the long run, more liquidity is poured into the token and this normally results in an increment in the price of an asset, in this case, AAVE.
In the same month at around the same period, AAVE was listed on eToro, eToro has 17 million users in approximately 100 countries. Since the United States is known for its liquidity stakes in assets, eToro has millions of registered users across 43 states and Washington, D.C. as of 2018. eToro’s 17 million users have now been added to users on Binance, Huobi Global, OKEx and Coin Tiger. This explains the consistent millions of dollars in trading volume being recorded by the digital asset. With such interest in the cryptocurrency, AAVE will only get better and possibly test its all-time high price before the end of the year. Simply put, AAVE is not going down in 2022.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Who Should Include AAVE In Their Portfolios?
- DeFi / Blockchain Enthusiasts: These are groups of people who are open to reading long-form articles and decoding the information provided. With an extensive interest in blockchain technology, reading whitepapers, and understanding how the protocol works, DeFi and blockchain enthusiasts understand the possibilities of Aave. Moreover, they understand the opportunities the protocol provides users to borrow money in an instant which results in earnings through interest rates for lenders. Such a group monitors upgrades, new exchange listings, and major investments from mainstream digital asset management firms. Adding AAVE to their portfolios could prove very profitable.
- Day Traders: Day Traders are active traders who normally execute intraday strategies to make profits off-price changes in a given asset. Day Trading can turn out to be a very lucrative career if you are highly sophisticated. Using strategies such as Scalping, Range Trading, News-based trading, and high-frequency trading, AAVEs volatility will prove highly beneficial to day traders and result in great earnings at the close of every trading day.
- Cryptocurrency Traders: AAVE is one of the most popular DeFi coins. It has great potential in the market. With more than 17,000 coins to choose from, a cryptocurrency trader can add AAVE to its growing lists of BTC, ETH, DOGE, ADA, TRX, EOS, DOT, LINK, DASH, LTC, ICP, and, BNB among others. With multiple percentage swings daily, cryptocurrency traders could see significant returns in the short and long term.
- Value Investors: Inasmuch as value investing is normally associated with stocks, cryptocurrencies and tokens are also tradable assets. AAVE is trading for less than its intrinsic or book value. Due to its undervaluation, several experts expect AAVE to command more than double its trading price. Therefore a value investor can add AAVE to his or her growing list of assets. Who knows, AAVE may be the missing asset to brighten up the portfolio.
- Growth Investors: Growth investing normally focuses on increasing an investor’s capital over time. AAVE is a young crypto trading asset with a year’s experience under its belt. As a result, the real valuation of AAVE is yet to be tested. Any investor who is searching for a growth asset can add AAVE to its list of assets and in the long term, AAVE could return 5 or 10 times its trading price.
But is 2022 too late to buy AAVE?
It is not too late to buy AAVE. Aave is trading at a fraction of mainstream cryptocurrencies such as Bitcoin and Ethereum. As a DeFi coin, it’s trading less than 10 times the price of Maker (MKR). As a less-experienced trader or investor, once you come across a bearish market, you tend to overlook the hidden opportunities such a season presents.
At Trading Education, we would like you to know that an UPTREND may ensue after prices correct and get over its resistance points. An UPTREND normally occurs when an asset reaches higher lows and after that reaches higher highs.
As per information retrieved from CoinMarketCap, AAVE reached an all-time low of $25.97 on 5th November 2020. At $87, an UPTREND is likely possible in the coming months because AAVE is trading way above its all-time low and shows signs of rallying towards its all-time high and crossing it in the future.
The only way out to see real earnings in the unpredictable crypto market is to HODL (buy and hold for the long term).
Read More: Pros and Cons of Investing in Aave
Is Investing In AAVE Risky?
YES! Investing in AAVE and all cryptocurrencies is highly risky. No analyst or expert can say they foresaw what was coming in 2021 with regards to the crypto boom with an eye on BTC crossing $40,000, $50,000, and $60,000. Trading and investing in AAVE can see you lose your capital in the space of minutes, hours, days, months, or if you are lucky in one year. With calculated risk, investing in AAVE could be one of the wisest investment decisions you ever made.
Risk Alert! Do not put all your money into AAVE or any cryptocurrency. Social media feeds only report gains and not losses. More than 90% of novice investors who venture into the trading and investing of cryptocurrencies normally lose all their investments. Diversification is the name of the game. You can also buy less-volatile assets such as stocks, bonds, commodities, and metals to help balance your portfolio.
Could AAVE Be A Bad Investment?
YES! AAVE could be a bad investment. Despite the essential features and the growing number of users on the platform, there is competition from mainstream cryptocurrencies. Aside from that, there is strong rivalry from other decentralized platforms primarily MakerDAO and Compound.
MakerDAO (MKR) at the time of writing commanded a trading price of $924. Compound (COMP) had a trading price of $50. Such prices can only be obtained through investor interest. If AAVE was the only crypto trading asset that is backed by a decentralized lending platform, it would have added the trading volumes of MKR and COMP to its existing volume.
Unfortunately, the user base and investor interest have been split across 10s of decentralized lending platforms and that is not good for AAVEs price in the future. Aave is known for its over-collateralization feature where a user would have to deposit more than what they can take as loans. This feature is not present on the protocols of rivals Maker and Compound and could harm AAVEs price going forward.
Do not take your eyes off your investments for a long time. You should check the digital asset’s price at least 2 times daily. This will prevent you from making huge losses. Take a risk but remember that AAVE like all crypto trading assets is not perfect.
Does Aave Have A Future?
YES! Aave as a protocol and its cryptocurrency AAVE have a future. It should be given time and space to grow to be able to compete well with centralized finance institutions, primarily commercial banks for customers. Unfortunately, articles found online do not cover Aave in its entirety. The content normally focuses on Aave, the decentralized lending platform.
Trading Education wants you to know that Aave goes beyond lending software. Being managed by a Swiss-based technology company, Aave offers development tools, ambient accounts, custody & payment services, and blockchain-based games. Aave continues to experiment with non-fungible tokens (NFTs) through its game Aavegotchi. What’s more, Aave’s Protocol has introduced a backstop through AAVE holders. With this, the liquidity shortages associated with ETHLend have been made up for through a feature called Safety Module. The primary purpose of the safety module is it protects the protocol from a capital shortage.
But how does this work? If the protocol does not have enough liquidity to support borrower requests at a specific period, the number of AAVE residing in the Safety Module is sold to cover the shortfall.
The historical performance of AAVE is impressive having recorded great returns for investors in 2020 and 2021. With more people asking questions about decentralized finance, AAVE will continue to see more liquidity on its platform and novel token. This will reflect positively on the valuation of the cryptocurrency.
How safe is Aave?
AAVE is largely considered safe. AAVE runs on the blockchain of Ethereum. To protect its network as well as ERC20 tokens, Ethereum decided to adopt the longstanding SHA-256 proof-of-work (POW) algorithm used by Bitcoin. With this, hackers will need to gain more than 50% of computational power before they can control the network. Aside from this, Aave is non-custodial. The Protocol belongs to the team behind the project but ownership lay in the hands of users. Users have control over their accounts in terms of their wallets and private keys. It is not impossible, but so far no hacker has been made able to make off with a substantial amount of money by breaking into a blockchain system.
Aave is therefore considered safe for use by potential lenders and borrowers.
How Legit is AAVE?
Aave is a legit protocol and so is its cryptocurrency. It is supported by Three Arrows Capital, DTC Capital, Framework, Blockchain Capital, Blockchain.com, DeFiance Capital, Standard Crypto, Blockchain.com, and Winklevoss Capital. These are major companies that know the potency of the project. This is the main reason why they have invested huge sums of money to back the project. AAVE as a cryptocurrency is listed on all the top exchanges. Without its potential in the market or volume in terms of trading, AAVE wouldn’t have been listed. AAVE is legit and you should not have any fears investing your money into the protocol or its novel token.
Alternatives to AAVE
Investing in AAVE is great. But, there are other decentralized finance (DeFi) coins such as Maker (MKR), Compound (COMP), Yearn Finance (YFI), and mainstream cryptocurrencies such as Bitcoin, Binance Coin, Tronix, Cardano, Dogecoin, Litecoin, LINK, EOS, and DOT. These cryptocurrencies have each returned at least 50% year-to-date and could bring enormous profits to you.
Conclusion: So, Is AAVE A Good Investment?
Investing in AAVE is worth considering. For many, investing in AAVE has proven to be a wise decision.
In October 2020, AAVE was trading at $50, and by May 2021 it had reached $660. In the space of 7 months, the value of AAVE had increased by 1,120%. For investors who purchased 1000 AAVEs at $50,000, selling at the right time in May could have resulted in $660,000.
So, is AAVE still a good investment? AAVE can be considered a good investment. And, if you are looking to invest in it, now could be the right time to do so.
While no investment is risk-free, investing in AAVE has generated more than 1000% for some investors in 2021. Whether you are a sophisticated or unsophisticated investor, understanding what to know before investing in AAVE is extremely crucial.
The prediction below outlines the potential lows and highs of AAVE in 2023, 2024, 2025, and 2026 offered by analysts at DigitalCoinPrice.
Aave Price Predictions in 2022-2026
In the end, the financial decision on whether Aave is a good investment and if you should invest in AAVE depends on you. What kind of investor are you? Are you a value or growth investor? Figure that out and your assessment will point you in a direction to decide as to whether Aave is a good investment.
If you are feeling inspired to start investing in AAVE, you may be pleased to know that eToro provides the ability to trade with crypto assets and CFDs on up to 90+ cryptocurrencies.
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How Many Aave Coins Are Left?
Currently, there are 14,093,192.58 AAVE represented by 88% circulating on the market from a total and maximum supply of 16,000,000 AAVE. Practically, there are 1,906,807.42 AAVE left which is represented by 12%.
Where Can I Buy Aave Coins?
There are several exchanges where you can buy Aave Coins. Based on safety and security analysis, eToro is one of the best exchanges out there that can help you with your trading and investing demands.