Learn more about the pros and cons of investing in Aave that will push you ahead to know if it is a good idea to invest in Aave.
AAVE with the possibilities of its protocol may just be the missing piece of your success puzzle. In this article, we are going to take a look at why you might consider investing in AAVE, the pros and cons, and the primary factors to look out for.
Before investing in Aave, you must understand what the digital asset is all about so that you do not risk your money. Investing in Aave by being alien to the cryptocurrency increases your chances of making huge losses and depleting your financial resources in the process.
First and foremost, Aave is not like the mainstream cryptocurrency we are used to. Instead, the crypto token is unique and has a primary function different from most digital currencies.
Aave, unlike Litecoin, Bitcoin, Dogecoin, Bitcoin Cash, or, Dash is an entirely new kind of protocol under the decentralized finance space that streamlines lending and borrowing of digital assets through the possibilities of smart contracts.
While this presents a great opportunity to make money, you must exercise restraint, get to know all areas of business of the protocol as well as any pitfalls it may have. This is because no crypto trading asset is perfect.
With the buzz around decentralized finance, is Aave a good investment? Is it worth investing in Aave? With competition from other lending platforms, should you invest in Aave? With the potential of having central bank digital currencies which will provide the same services as commercial banks in granting citizens loan, does Aave have a future? With its dominance in the DeFi space, will AAVE make me rich?
Contents:
- What is Aave?
- The PROS of Investing In AAVE
- The CONS of investing in AAVE
- How to Invest in Aave Coin / Where Can I BUY AAVE?
- Will AAVE Be A Millionaire-Maker?
- Conclusion: So, Is AAVE a Good Investment?
- FAQs
What Is Aave?
Aave is an open-source and non-custodial liquidity protocol for earning interest on deposits and borrowing assets. In simple terms, Aave is a decentralized finance protocol that allows people to lend and borrow crypto. It was founded by serial entrepreneur Stani Kulechov as ETHLend in November 2017.
A rebranding of the project saw a name change from ETHLend to Aave in September 2018. The protocol is managed by Aave (a Swiss-based technology company). Aside from the lending software, Aave offers an extensive list of products that include but are not limited to developer tools, blockchain-based games, ambient accounts, and custody and payments services.
Aave is a decentralized finance application that runs on the Ethereum Network as an ERC20 token. Although articles found on the internet do not differentiate between Aave and AAVE, Trading Education would like you to know that Aave represents the decentralized lending protocol and AAVE is the ticker symbol it trades by on exchanges.
Aave effectively exists as three independent but interconnecting things.
- Aave Network - this is the lending platform that facilitates transactions between lenders and borrowers of Ethereum-supported tokens in a permissionless and trustless manner.
- AAVE - this is the novel token of the network. As a governance token, AAVE holders have the power to vote on upgrades to the network. Aside from this, holders also vote on which cryptocurrencies the network should support and the adjustment of collateralization.
- Aave Team - this is a multicultural group of creative experts well-versed in computer programming, engineering, and cryptography. They oversee the continuous development of the protocol and its novel token.
Aave was created due to the frustration on the part of Stani Kulechov who couldn’t wrap his head around the fact that Ethereum lacked lending applications. It may come as a surprise to you that Aave was built as a pilot project in secrecy before the existence of decentralized finance.
Aave was created for two reasons. Firstly, Aave, just like other decentralized lending platforms, was created to help its users make relatively higher interests in their capitals. Most often, millions of dollars become dormant on cryptocurrency exchanges due to a lack of favourable crypto market sentiment.
This sees traders wait for the right time to issue trades. By waiting, traders do not obtain any interest in those assets. Aave saw this opportunity and allows investors to deposit digital assets into specially created liquidity pools. Borrowers, therefore, use crypto as collateral for flash loans. Lastly, centralized financial institutions (commercial banks) which have the function of issuing term loans provide small interest rates to lenders. Aside from this, they demand security from borrowers which delays the process of needing liquidity to meet real-time goals and objectives.
Through the decentralized lending platform, users do not have to go through a long process. Lenders deposit liquidity within minutes which are taken up by borrowers within a short period.
The centralized system resulted in costly procedures, long waiting times and if your proposal for a loan was rejected, the process becomes unreliable.
Ready to Invest in Aave?
Just a couple of years after it was released; Aave has risen to the top of decentralized finance in terms of total value locked in as per data retrieved from DeFi Pulse. Slowly but surely, several users began showing interest in the lending protocol. After the boom in DeFi in the summer of 2020 and the whole of 2021, a huge part of Ethereum users became lenders on Aave.
Today, more than 40,000 unique users have become lenders and borrowers on the protocol.
Some of the biggest stakeholders of Aave are Blockchain Capital and Standard Crypto. They believe in decentralized lending innovation and make funds available for the continuous development of the project.
What’s more, Polygon is helping Aave scale relatively faster due to the relatively slower speed of processing by the Ethereum Network because it relies on the proof-of-work (POW) algorithm for security.
For many crypto and financial analysts, Aave has the potential to dominate the decentralized lending platform. Some experts have opined that Aave could even replace commercial banks due to its relatively higher interest rates which have created passive income for thousands of people.
To help you make a great decision about your next investment move, here are the pros and cons of investing in Aave.
Trading Education has delved deep into Aave. The e-learning platform is the right place for you to know the pros and cons of investing in Aave so that you can conclude if it’s a good idea to invest in AAVE.
Read Also: Could Aave Be A Millionaire-Maker Coin?
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
The PROS Of Investing In AAVE
What Are The Benefits Of Investing In AAVE?
Several crypto analysts and experts believe AAVE has great potential in the crowded crypto finance space. This makes investing in AAVE an attractive decision for novice and experienced traders. Here’s a look at why AAVE is a good investment and why it is worth your money.
✅ AAVE has Demonstrated Resistance against Price Patterns of Bitcoin
Bitcoin has the first-mover advantage in the space. More often than not, alternate coins (altcoins) such as Ether, Cardano, and Tronix follow the digital gold in bullish days and bearish seasons. On Wednesday, 12th May 2021, Elon Musk posted on his social media handle at Twitter that, “Tesla has suspended vehicle purchases using Bitcoin. We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Bitcoin opened on Wednesday, 12th May 2021 at $56,714.53, reached an intraday high of $57,939.36, and plunged to $49,150.53 to close the day due to the effects of the announcement. In the process, Bitcoin lost 13.337% of its opening price.
The second most popular and second-largest cryptocurrency by market capitalization, Ethereum opened on Wednesday, 12th May 2021 at $4,174.64, reached an intraday high of $4,362.35, and plunged to $3,785.85 to close the day due to following the price patterns of BTC. In the process, Ether lost 9.31314% of its opening price.
AAVE opened Wednesday, 12th May 2021 at $457.40, reached an intraday high of $595.83, and closed the day at $490.58. In the process, AAVE gained 7.25404%. AAVE carried the bullish momentum into Thursday, 13th May by opening at $509.09 and closing at $508.64. AAVE headed into the weekend trading above $500.
Unfortunately, BTC and ETH headed into the weekend and third week of May with relatively lower prices than they traded for before the announcement was made by Elon Musk.
This is extremely important for traders and investors of AAVE. Once a DeFi coin finds some independence in the crypto trading space, investors can trust the digital asset and take high risks knowing that their investments are not going to be in the red zone in the future.
Such independence from Bitcoin and other altcoins during the second week of May which resulted in new high lows certifies AAVE as an asset that is likely a good investment. Experts at Gov. Capital have weighed in on the future of the digital asset.
According to the experts, AAVE's dominance in the DeFi space coupled with the huge number of users that employ its protocol to carry on their lending and borrowing duties could see the cryptocurrency trade for the best possible price of $562.67 by the end of 2022. Although several price forecasts project the year 2023 to be a bearish season for cryptocurrencies, the online portal for the prediction of financial assets foresees AAVE with $1,842.06 written to it on cryptocurrency exchanges by the end of that year. In the long term, Gov. Capital expects AAVE to command the best possible prices of $3,449.52 (2024), $5,342.89 (2025), and $7,511.04 by the close of the day on 31st December 2026.
Purchasing AAVE now when it's trading below $134 could see you have a 319.9% return on your investment.
✅ AAVE Brought Huge Returns to Investors in 2021
When AAVE reached its all-time high of $666.86 on Tuesday, 18th May 2021, it had returned 661.777% for investors year-to-date. This placed AAVE under the category of digital asset investments with the best return in 2021.
With the craze in DeFi and cryptocurrencies just in its foundation stage, there is a huge probability that AAVE will command a relatively higher price than its all-time high. Once this happens, the digital asset will increase in returns for investors as well as its overall market valuation.
In June 2021, there were more than 100 million users of cryptocurrencies. Binance’s Research on crypto usage confirmed the number of people who are into decentralized applications. With new partnerships being announced quarterly such as AAVEs integration on WIREX, improvement in the scaling of the protocol, and positive crypto market sentiment, AAVE could cross numerous price milestones before the end of 2022.
Digital Coin Price thinks AAVE has potential in the rising DeFi market could see it trade for a coin at $173.01 by the year’s end of 2022 and increase significantly to close 2023 at $212.48. The novel token of the lending protocol could command prices of $226.72 (2024), $266.45 (2025), $267.33 (2026), $341.88 (2027) and $484.66 (2028), as per the forecasts of the crypto news and prediction website.
Based on the price forecast of Digital Coin Price, investing in AAVE now could see you walk away with at least 29.11% return by the end of 2022.
Don't Miss: Aave Price Predictions
✅ Aave Has Increasing Total Value Locked
Total Value Locked is used to assess the gains and profits that could be made from the provision of liquidity. DeFi gained ground in the summer of 2020. As per information retrieved from DeFi Pulse, a thorough analysis of AAVE’s TVL from June 2020 to June 2021 will be briefly highlighted below.
On 13th June 2020, the total value locked in Aave stood at $88.113 million. By the end of June, TVL had increased to $117.501 million. Aave crossed the $200 million price milestone in mid-July and surpassed the $300 million price mark on 19th July 2020. The $400 million price milestone was tested on 20th July which was followed by $525.8 million in TVL by the end of 22nd July 2020. By the end of the 3rd quarter of the year (September), the total value locked was $1.493 billion. Aave ended 2020 on 31st December 2020 with a $2.019 billion total value locked. There was a 2,191.38% increase in total value locked in Aave’s protocol.
On 1st January 2021, AAVEs price of $87.54 corresponded with a TVL of $2.05 billion. By the end of the 1st quarter (March), TVL had reached $5.713 billion. TVL on Aave reached an all-time high of $14.423 billion on 14th May 2021. As of 7th June 2021, Aave’s TVL stood at $12.238 billion. There has been a 603.561% increase from 1st January to 7th June 2021.
With such liquidity at the disposal of Aave for borrowers to obtain flash loans and lenders to gain great interests, the average trading price of AAVE could multiply 5 or 10-fold in the future. With the increased interest in the protocol, AAVE is an investment you should consider making an investment decision on.
Coin Price Forecast has added its voice to the future performance of AAVE in a saturated market and foresees AAVE with a price of $212 by June ending and $203 by the end of 2022. In the short-term, the experts believe AAVE could command best possible prices of $183 by the close of 2023, $210 (2024) and $264 (2025).
In the long term, AAVE is going to have trading prices of $316 by the close of 2026, $377 (2029), $377 (2030), $413 (2031), and $449 (2032).
Coin Price Forecast attributes such a rally in prices to the hold Aave has on not only the lending space but the whole decentralized finance space.
All other things being equal, AAVE could return at least 51.49% by the end of 2022.
✅ Aave Is Forming More Partnerships
In May 2021, the digital payments platform, WIREX, listed AAVE and 4 digital assets. As a result, AAVE it’s currently available to purchase fee-free for a limited time.
Since Aave Protocol allows for the supplying & borrowing of a variety of crypto assets, and the ability of users to earn interest on their crypto assets supplied to the protocol, WIREX aims to use its platform to bridge the gap between the digital and traditional economies.
As a result, this new integration will help WIREX users seamlessly buy, hold, exchange, and spend these digital currencies with their contactless WIREX CARD across 61 million locations globally.
This means that AAVE has become one of the main financial instruments being used to change the financial trajectory from a centralized to a decentralized system.
CryptoNewsZ believes Aave has tremendous growth. According to the experts, AAVE is forecasted to have an average price of $950 by the end of 2022. Much of the projection is attributed to partnerships, alliances, and community funding. In the medium term, government policies and regulations could see a mild increase in the price of AAVE. The novel token backing the lending protocol could test $1,100 and settle at $1,200 by the end of 2023.
CryptoNewsZ believes in the long term, AAVE is going to be at the center of all cryptocurrency-related investments. According to the crypto news website, AAVE could command trading prices of $1,500 by the close of 2024 and increase significantly to $1,750 by the end of 2025.
As per the prediction of experts at CryptoNewsZ, buying AAVE now could see an investor return of at least 608.96%.
✅ Aave Has Support from Authentic Stakeholders
Several crypto projects could not survive due to a lack of authentic and credible stakeholders as backers. Fortunately, Aave has the backing of Blockchain Capital, DTC Capital, Three Arrows Capital, Parafi Capital, Framework, Blockchain.com, DeFiance Capital, Standard Crypto, and Winklevoss Capital.
The holders make funds available during upgrades. Most of them played an invaluable role in the creation of the lending platform. The legitimacy of these companies which have the appropriate licenses of operation makes it easy to trust Aave. Aave’s team is composed of technology gurus who contribute to extensive activities in the internet space and not just decentralized finance.
With more capital readily available to the development team, Aave could go through upgrades in a relatively easier manner. The trust in the protocol through the association of stakeholders bodes well for the future of the digital currency. This is because no investor would throw money into a project with shady stakeholders.
Wallet Investor believes AAVE could trade for a coin at $17.14 by the end of 2022. In the medium term, the experts foresee AAVE trading at an average price of $7.58 to close out 2023. In the long term, the novel token behind the decentralized lending protocol could see average prices of $7.41 (2024), $9.74 (2025), and $6.69 (2026).
✅ AAVE is Finite in Supply
It should also be noted that demand and supply always play an integral role in the future valuation of an asset. One of the trending questions online is, how many Aave coins are left and how many Aave coins are in supply? Currently, 13,486,218.76 coins are circulating on the market from a total supply of 16,000,000. With Aave’s stance on the market, the coins could be picked up before the end of 2022. 84% of the coins have been mined leaving 26% up for grabs. The crypto finance world may see a spike in the price of AAVE once the demand for the cryptocurrency exceeds its supply.
✅ Aave Has Embraced Layer-2 Scaling Technology with Polygon
Aave runs on the Ethereum Network. Blockchain enthusiasts know that Ethereum 1.0 relies on Proof of Work (POW) which makes it relatively slower when processing transactions. Embracing Polygon’s layer-2 scaling solution means Aave has made steps to bolster its adoption.
The resultant effect of this deployment is a 50% increase in monthly user base which is greater than Compound and Maker DAO. What’s more, if you exclude Aave’s deployment on Polygon, Aave outpaces Maker DAO and Compound in terms of total value borrowed.
The biggest news is this partnership with Polygon has taken Aave’s locked-in capital to more than $20 billion. Aave holds more than $12 billion on its platform and $7.8 billion on its version of Polygon.
If Aave continues this way, its protocol is going to leave the other lending platforms behind. The progress of an issuing authority normally results positively in the market value of its novel token.
Check Out: 17 Reasons Why You Should Invest in AAVE Today
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
The CONS Of Investing In AAVE
What are the disadvantages of investing in AAVE?
Just like all assets, AAVE is not perfect. So long as it is a crypto trading asset, its price history has ups and downs. There are several features of the lending protocol that could negatively affect its price. Let us take a look at the risks of investing in AAVE.
❌ There is Over - Collateralization of Digital Assets
One of the biggest problems of using the Aave Protocol is over-collateralization. Since decentralized lending thrives on customers locking up crypto assets, Aave demands its users lock digital assets that are worth more than the amount they are going to borrow.
For the average Joe who wants to benefit from decentralized finance, lending systems that are requiring large amounts of capital before loans can be granted do not help their course. This is the main reason why Aave has the most total value locked but shares similar user rates with Compound, Maker, and other decentralized lending platforms.
If this issue is not rectified in time and competitors continue to offer relatively better services, Aave is going to miss out on patronization. Once the issuing authority behind a cryptocurrency loses its base, the crypto trading asset has no way of surviving.
❌ Aave Offers Low-Interest Rates
Although a low interest rate is great for borrowers, the same cannot be said for lenders with huge liquidity to spare. This could make Aave Protocol less appealing to potential investors who are sold into yield farming or liquidity mining.
Once investors conclude that they cannot see a substantial return on their investments, they have to opt for better platforms that can provide them with the opportunities they crave for.
This decreases the use rates of Aave and with every passing day, the total value locked will see a decrease until it reaches new high lows. Many people are moving from centralized finance to decentralized finance because they want to make money.
AAVE holders in the not-too-distant future may have to take a decision on voting for interest rate changes or see the asset plunge and with time plummet to lows that may not be recovered.
❌ Strong Rivalry
Aave is in competition with 100s of decentralized platforms such as Venus, Torque, TrueFi, Unit Protocol, Liquidity, Notional, Oasis Borrow, Fulcrum, Cream Finance, Compound, Alchemix, 88mph, InstaDApp, dYdX, Dharma Protocol, bZx, KittieFight, and Mainframe among others.
Most of these platforms may not have the same total value locked in their Protocols as Aave, but they offer relatively higher interest rates than Stani Kulechov’s innovation. In the long term, it can have a negative effect on the price of AAVE.
How To Invest In Aave Coin / Where Can I Buy AAVE?
AAVE is one of the most popular DeFi coins on the market. Therefore, there are several brokerages and exchanges where you can invest in AAVE. With that said, there has been a flood in cryptocurrency exchanges in the last 10 days. The owners joined the crypto finance train to have a fair share of the market. This is the main reason why some of their platforms have been involved in shady schemes and scams.
We would like to recommend eToro as the exchange that can help you invest in AAVE. On 27th May 2021, AAVE was listed by eToro as a crypto trading asset. For eToro to list a cryptocurrency means the legitimacy and authenticity of the asset cannot be called to question.
Kindly follow the instructions below and you’d be set on a path towards investing in AAVE.
The First Step is to SIGN UP. Provide authentic details of your name, email & residential address, and phone number.
The Second Step is to VERIFY YOUR ACCOUNT. eToro will request you to provide a government-issued identification card that confirms the details you input in Step One. For residents in what are deemed remote countries, eToro may request proof of address. Under this process, you’d be asked to upload a credit card or a bank statement to confirm the details of residence.
The Third Step is to DEPOSIT FUNDS. Without funds, you cannot buy AAVE. Choose from a range of options which include but are not limited to PayPal, Skrill, VISA and, MASTERCARD.
The Fourth Step is to NAVIGATE to AAVE PAGE. On this page, you can buy several AAVE that meet your investment budget. The transaction would be processed and added to your account.
Risk Alert! Investing in AAVE and other cryptocurrencies is extremely risky. You stand a chance of losing all your investments within minutes, hours, weeks, or a few months. As an e-learning organization, we are here to inform and that is why we urge you to diversify your portfolio so that you wouldn’t lose everything. You can also set aside an amount of money you are willing to write off as bad debt. This way you can try your hands on digital assets without any emotional guilt if all your investments head south.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Will AAVE Be A Millionaire-Maker?
In a sense, it already is - AAVE has a market cap of $1.8 billion at the time of writing. If it continues to form more partnerships that will expand the mileage of the cryptocurrency, AAVE could command a huge price in the short and long term.
Being a finite resource, the value of AAVE is likely to go up. This is because scarcity tends to increase the price of assets. Always remember that no investment is risk-free. Only invest an amount of money you can afford to lose. Before you make a decision on AAVE, it would be great that you conduct independent research on the digital asset.
Based on the current price of AAVE, the cryptocurrency can become a millionaire-maker in the following way.
At $134.71, buying 225 AAVE will cost you $30,309.75. In the event the price forecasted by Gov. Capital for 2025 is tested ($5,342.89), your investment would mature to $1,202,150.25. This means that investing in AAVE can increase by as much as 3,887.23% in the space of 3 years.
Read More: AAVE Price Prediction for 2025 and 2030
Conclusion: So, Is AAVE A Good Investment?
According to Previsioni Bitcoin, AAVE is a good investment and could trade for a coin at $257.57 by July and have a trading price of $197.20 by the end of 2022. AAVEs issuing authority has found a solution to the scaling problems associated with DAPPS. It’s forged great partnerships with WIREX and has great stakeholders behind the project.
Most investments come down to risks versus rewards. You should always ask the question, do the potential rewards outweigh the possible consequences of the risks?
AAVE certainly has some risk factors such as a strong rivalry from decentralized lending platforms such as Compound. It’s also miles away from challenging its main market rival (Maker) which trades for 10 times its current price. Moreover, Aave does not have an extensive dominance of the decentralized lending space.
Have You Considered Investing in AAVE?
On the other hand, Aave Protocol is becoming more mainstream due to the backing of several players in the game such as DeFiance Protocol, Three Arrows Capital, and Blockchain.com.
Aside from this, the current trading price of AAVE is a low barrier of entry for novice investors who would like to get in on the action of decentralized finance. For the sophisticated trader or investor, the relatively lower price of AAVE presents a great opportunity to add one of the top DeFi coins to a growing list of high-yielding assets.
To put it simply, AAVE comes with potential rewards as a low-risk investment. You should do extensive research about the protocol to enable you to decide on its crypto trading asset.
The real question then is, does investing in AAVE work? For some, AAVE has returned more than 600%. If you are willing to put in the time and energy to research coupled with an amount of money set aside for digital assets investment, AAVE may work for you.
Now that you know the pros and cons of investing in AAVE, if you want to start investing in AAVE, eToro provides the ability to trade with crypto assets and CFDs on up to 90+ cryptocurrencies.
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.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
FAQs
Is Aave Built on Ethereum?
YES! Aave is a decentralized lending platform that aids in the lending and borrowing of digital assets. Aave runs on Ethereum as an ERC20 token. Running on Ethereum means it conforms to the features of Ethereum in terms of scaling and security which is summed up in the proof-of-work algorithm. Aave is one of the top decentralized finance applications on Ethereum. It has the most value locked in and commands substantial volumes which have made it the twenty-eighth largest digital asset globally.
Is Aave Legit?
Aave is highly legit. The legitimacy and authenticity of a cryptocurrency are highlighted in its partnerships, integrations, deployments as well as accessibility. Aave continues to form successful partnerships with industry players such as the digital payment platform WIREX. Aave has been deployed on Polygon to help it scale faster and more importantly, it has been listed on top cryptocurrency exchanges.
Binance conducts research about the use of cryptocurrencies during certain periods and would never list a cryptocurrency that would taint its image and bring shame to its status as the largest cryptocurrency exchange worldwide. Huobi Global, OKEx, Coin Tiger, FTX, and a host of exchanges also list AAVE due to high investor demand.
If you are unsure of what cryptocurrency exchange can safely and securely hold your AAVE coins without incident, we’d like to recommend eToro for you. In 15 years, eToro has served millions of people. With relatively lower commission fees, more people have made gains using the platform and attest to its user-friendly nature.
How Much Will Aave Be Worth?
Aave is forecasted to be worth more than 2, 3, 5, or 10 times its current trading price in the future. According to Trading Beasts, AAVE could command the best possible price of $214.94 by the end of 2022.
In the long term, the financial news and forecasting portal believes AAVE could have a maximum trading price of $265.36 by the close of 2023 and by 31st December 2024, trade at $330.41.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Does Aave Have a Future?
YES! Aave does have a future. One of the main factors you should always check is the trading volume of a cryptocurrency. Trading Volume does not mean an asset is going to exist in the next 5 or 10 years but it plays a great role in deciding as to whether there is investor interest in a particular asset.
At the time of writing, the trading volume for AAVE was $281,046,978. Since 1st April 2021, AAVE has been recording at least $100 million in daily trading volume. With such a figure in mind, you should know that interest in the asset is not waning anytime soon and your investment could result in great returns in the long term.