Want to jump straight to how to buy AAVE? You can buy AAVE today on Coinmama!
The world of decentralized finance is one of the most exciting sectors of the cryptocurrency sphere. Aave (AAVE) is a decentralized finance (DeFi) protocol aimed at using the power of blockchain technology to help users borrow and lend cryptocurrency in a much more efficient manner than traditional lending and borrowing. This is all thanks to Ethereum, the smart contract blockchain that powers the Aave protocol.
If you’re thinking about expanding your investments in the cryptocurrency space, Aave can be an excellent token to begin with. Our guide will show you exactly how to buy Aave, how the token functions where you can store your tokens for the highest level of protection and more.
What is Aave?
Aave is a decentralized lending platform built on Ethereum's network. It allows users to borrow, lend and earn interest on crypto assets, all without middlemen, credit checks or anything. It is built on Ethereum using smart contracts, which is simply code uploaded to the blockchain. The fact that it's safe on the blockchain gives it key features that aren't seen in traditional computer science –– smart contracts on Ethereum are decentralized, autonomous and (nearly) immutable. You can think of smart contracts like a vending machine; there's no intermediary, and once the machine recognizes you've put money in, the program will execute a pre-programmed function. This means Aave users are not reliant on a trusted institution or person to manage their funds. They need only trust that its code will execute as written.
The platform uses smart contracts to manage lending markets for a variety of different cryptocurrencies. Each cryptocurrency has its own liquidity pool where users can deposit or withdraw from. Those who withdraw funds are taking out crypto loans, and those who deposit funds are lending out their digital assets. To ensure that loans are paid back 100% of the time, users must put up high collateral requirements to receive a loan. Further, borrowers can only borrow up to a certain percentage of the value of the collateral they post, depending on the coins used as collateral.
Borrowers receive funds in the form of a unique token referred to as an Aave Token or aToken, which is pegged to the value of another asset. This token is encoded so lenders receive interest on deposits. In the future, Aave could also implement additional features, such as instant loans and other forms of issuing credit and debt that take advantage of the unique design properties of blockchain technology.
Brief History of Aave
Aave is a decentralized finance protocol that allows users to borrow and lend cryptocurrency using a largely anonymous platform. Previously known as ETHLend, Aave was launched in November 2017.
In addition to securing the application, Aave tokens allow holders to have voting shares in future company matters in a similar manner that stockholders can vote on company matters based on how many shares of stock they own.
Steps to Buy Aave
- Open an Online Account.
The 1st step to buying Aave begins with opening an account with an exchange that supports Aave. A crypto exchange will provide you with a trading platform that you can use to buy and sell cryptocurrencies for a fee.
There are a wide range of cryptocurrency exchanges that support Aave, and the best broker for you will vary depending on where you live and the types of cryptocurrencies you want to invest in.
Not sure where you’d like to open an account? Consider a few of our favorite cryptocurrency exchanges that are available to U.S based investors. One of the best exchanges that supports AAVE as well as many of the other top cryptos is Coinmama. It allows for extremely easy purchases with credit or debit cards as well as traditional bank accounts.
- Buy a Wallet (Optional).
After you decide where you want to purchase Aave and you open your account, you can open a wallet to safely store your tokens. A cryptocurrency wallet provides you with a private set of keys that you can use to store your tokens off your exchange, which limits your liability if your account is hacked. There are 2 types of cryptocurrency wallets (hardware and software) and each comes with its own unique benefits and drawbacks.
As an ERC-20 token, you’ll have a number of options when it comes to storing your Aave. Consider our favorite hardware and software wallets below.
- Make Your Purchase.
When your wallet is set up and you’ve fully opened and funded your brokerage account, you can place an order to buy AAVE. Placing an order to buy crypto involves a few steps.
Step 1: Choose your order type. The type of order that you choose will determine when your order is filled and how much you pay for each coin. You can browse some of the most common order types here.
Step 2: Decide how much AAVE you want to purchase. Cryptocurrency prices are constantly changing. Take a look at the current market rate of Aave before you decide how many tokens you want to purchase.
Step 3: Place your order. Depending on the type of order you’re using, you might need to specify a maximum price that you’re willing to pay per token as well as the number of tokens you’d like to purchase.
Step 4: Wait for your broker to fill your order. After you’ve submitted your order, your broker will fill it according to your instructions. When the order is complete, you’ll see your tokens in your brokerage wallet. If your broker is unable to fill your order, they may cancel it at the end of the trading day or they may leave it open indefinitely depending on the broker.
Recommended Exchanges for AAVE
Recommended Wallets for Aave Tokens
Now that you know how to buy Aave you need to know how to store it safely. Here are a few of the best cryptocurrency wallets on the market.
Best Hardware Wallet: SecuX V20
If you’re searching for the perfect blend of security and portability, the SecX V20 might be the right cryptocurrency wallet for you. The SecuX V20’s durability begins with its tamper-proof case, which provides you with peace of mind when you take your device with you on your travels.
The wallet features Bluetooth connectivity and a full-color touchscreen to view and manage your tokens without connecting to local, unsecured Wi-Fi. Best of all, the device supports over 1,000 individual cryptocurrencies — providing you with a single place to store all of your blockchain investments.
Best Software Wallet: MyEtherWallet
MyEtherWallet is the original cryptocurrency wallet used to store Ethereum — but the software has expanded to include all types of ERC-20 tokens as well. MyEtherWallet features a simple setup and mobile app, allowing most users to create their account and get started transferring their tokens in as little as a few minutes.
You can connect your mobile app to your desktop using a QR code. If your phone moves too far away from your computer, the wallet will automatically disconnect — meaning that you won’t need to worry about leaving your wallet connected if you’re on a public internet connection or device.
Aave is an ERC-20 token, which means that it runs using the network laid in place by Ethereum. If you’re looking for a way to diversify your investment while also buying into emerging decentralized finance technology, an investment in Ethereum might be right for you.
Trade or Sell Your Cryptocurrency
If your broker is able to fill your order, you’ll need to decide if you want to hold your Aave long-term or if you want to take advantage of short-term price movements. If you think that the price of Aave will rise in the future, you may want to store your tokens in your private wallet.
And if you believe that the price of Aave will fluctuate in the upcoming days or weeks, you might want to short or scalp your tokens to accumulate more Aave.
When you decide to take profits, you can convert your excess Aave to a stablecoin like Tether or USD Coin. Select brokers may also allow you to convert Aave directly back to fiat currency.
If you plan on executing multiple trades throughout the day, you’ll want to choose a crypto broker with lower fees and a responsive platform. Consider a few of our favorite choices below.
Current Crypto Prices
The cryptocurrency market is extremely volatile, often fluctuating by large amounts within a short period of time. You might notice the price of Aave changing drastically on a day-to-day basis. Some of the factors that can influence how the cryptocurrency market is moving include:
Laws and regulations. The cryptocurrency market is still largely unregulated. However, individual states and countries have instituted their own rules regarding the purchase and sale of cryptocurrencies. The introduction of tighter regulations or bans can cause the price of coins to plummet.
- Media, news and announcements. Like stock trading, cryptocurrency trading can be influenced by the announcement of major updates, new partnerships and network upgrades. Keeping your eyes on cryptocurrency news and major developments can help you predict how the market will move.
- Financial markets. When traditional markets crash or see a sudden drop in value, investors tend to move their assets into alternative forms of investments. While these alternative investments usually include things like real estate and precious metals, recent years have seen more investors putting their money into major cryptocurrencies when markets drop.
- Supply and demand. Unlike fiat currency, there is a limited number of most types of cryptocurrencies. The higher a demand for a particular coin is, the higher the price will go. When demand falls, the price of the coin or token will also drop because fewer buyers are available.
- Mining costs. Cryptocurrencies like Bitcoin must be created using a process called “mining.” Mining requires a specialized computing device called an “extractor,” which uses a large amount of power and gets more difficult as more coins are produced. As mining costs increase, you can expect the price you pay per token or coin to increase as well.
- Crypto crash of 2022. While markets have crashed and recovered throughout history, the crypto crash of 2022 was rather intense, forcing many cryptocurrencies back down to levels they had not seen in some time. This may mean that you need to wait even longer for a new crypto investment to perform in the manner that you imagined.
It is important to note that high risk isn’t inherently bad or good for an investor. Risk works both ways, meaning that each investment into crypto carries the risk of significant failure and benefit of significant success. As an investor, you must evaluate your own risk tolerance before venturing into a cryptocurrency investment and decide between a short-term strategy, long-term strategy or a combination of both.
Keeping your eyes on how the market is moving can help you decide when the best time to buy and sell your coins is. View a summary of today’s market movements using the table below.
Should Aave Be Your Next Investment?
Aave is among many exciting projects running using the Ethereum network’s decentralized application functionality. Decentralized application projects are currently being developed in a wide range of industries, including banking, gaming and file storage.
Learning more about the Ethereum network and diversifying your investments can help increase your success on the cryptocurrency market. Get started today with 1 of Benzinga’s recommended brokers.
Frequently Asked Questions
How can I make a withdrawal on Aave?
On the Aave dashboard, you go to deposit and select withdraw.
How can I borrow on Aave?
You go to the website, choose the token to borrow on and select the borrow option.
What sector of the crypto market is Aave considered a part of?
Aave is considered to be a large part of the Decentralized Finance (DeFi) crypto sector.
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About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.