Is Aave a Good Investment?

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Contributor, Benzinga
October 11, 2021

Decided Aave is a good investment? You can get Aave on Coinbase today.

Aave is a unique and revolutionary decentralized finance (DeFi) protocol. It uses the power of the blockchain to allow users to borrow and lend cryptocurrency, cutting out the middleman which traditionally took the majority of profits from lending. With over $20 billion managed by Aave, cryptocurrency enthusiasts have adopted the platform as the go-to decentralized lending protocol. Aave has the ability to potentially be a crypto and economic powerhouse. 

Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.

What Is Aave?

Aave is a decentralized application (dApp) that runs on the Ethereum network. It relies on users across the network to allow for the borrowing and lending of cryptocurrency. Aave offers a wide variety of cryptocurrencies that can be borrowed or lent. Aave operates on Ethereum, which means transaction fees can be high. Luckily, Aave has implemented the layer 2 solution Polygon, which significantly reduces the fees one needs to pay to lend and borrow cryptocurrency.

The platform presents a unique opportunity to integrate borrowing and lending in the crypto sphere. Users place their investments into a liquidity pool, which is a collection of funds used for lending and borrowing. The money in the pool can be used by others, but there are fees involved. These fees are determined by the supply and demand of the underlying asset. A portion of the fees are given to those with funds in the liquidity pool.

There are 2 types of fees: stable and variable. As the name suggests, stable interest rates do not move much and are for short-term loans. Variable fees are for the long-term loans and move with the supply and demand of the underlying asset. The borrowing rates of most assets can be found on Aave’s website

Aave Price

At the time of writing, Aave is currently trading around $300. It has a market cap of over $4 billion, a 52-week low of $25 and a 52-week high of nearly $670. It is currently ranked 44 of CoinMarketCap’s most popular tokens by market capitalization. It has a maximum supply of 16 million tokens, and 82% of all tokens have been minted. 

Aave Competition

Aave’s biggest competitor is Compound. Both are decentralized lending platforms. While they may appear to be similar, a few major differences exist. Aave operates as a peer-to-peer protocol. This term means that funds can be sent and received directly from liquidity pools, and individuals set the time and amount of funds they deposit. Conversely, Compound does not use a peer-to-peer network in the same way Aave does. It takes funds from a generic liquidity pool and loans them to other users. Because you can choose between fixed and variable interest rates on Aave, it can provide better interest rates if you can find the best currency pairs to provide liquidity for. Aave also offers more currencies. Different rates on a variety of digital assets can be good as it provides more options, but also means less liquidity per pool. The 2 platforms have pros and cons but currently function as the biggest decentralized lending platforms in the DeFi world. 

How to Buy Aave

Now that you understand the basics of Aave and its competitors, you may be interested in purchasing the token. Fortunately, doing so is fairly easy and only involves 2 or 3 steps.

Step 1: Open an online account.

The first step in purchasing Aave is to open an account on a crypto exchange. This process is simple and usually only requires an email or phone number. While you can find many exchanges to buy Aave, Coinbase stands out due to an emphasis on education, a simple interface and speed of transactions. Other solid platforms that offer Aave include eToro and

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Step 2: Buy a wallet (optional). 

While exchanges serve as mediums of purchase and sale for cryptocurrencies, wallets serve as a way to store cryptocurrency. Wallets add another layer of protection to your crypto assets.

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securely through Ledger Hardware Wallet's website

Best Hardware Wallet: Ledger

Ledger is a hardware wallet that is extremely easy to use and supports the sending and receiving of Aave tokens. Once you have purchased a Ledger hardware wallet, you download its software onto your computer and create an account. You’ll be assigned a wallet address (typically a long string of letters and numbers) and then you can send and receive Aave through the wallet. Hardware wallets offer an extra level of security as opposed to software wallets. However, they cost money to attain, whereas software wallets are typically free. 

Best Software Wallet: Coinbase

Coinbase provides a simple and easy approach to investing in cryptocurrency. It is also easy to send cryptocurrency across the blockchain. Some other options for exchanges are and However, Coinbase offers a dedicated wallet service, Coinbase Wallet, to let you hold custody over your digital assets. After you create an account on an exchange, you can link your bank account and send funds to your account. Then, you use the funds to purchase Aave. 

Step 3: Make your purchase.

On Coinbase or other supported exchange, head to your account. There, you will find a tab to link a bank account to your account. Enter your bank details through a secure third-party service and transfer the desired amount of funds into your account. From there, navigate to the trade tab. You can either scroll or search to find Aave. Once you have located the currency’s profile, you click trade and then purchase. Enter in the amount of Aave you wish to buy and the currency will be in your profile. It is then stored in your Coinbase wallet, where you can either sell or convert it. 


Bonus Section

Keep an eye on the interest rates that Aave offers. Because most lending platforms are fairly similar, interest rates will determine if Aave is successful in the long run.

Current Crypto Prices

In early October 2021, Bank of America (NYSE: BAC) said that Bitcoin (BTC) is too large to ignore, citing the opportunity it sees in the project. This statement marked a huge moment in the cryptocurrency world as many institutional investors have been hesitant to get involved with crypto. This move could be the beginning of many large firms taking a look at the benefits of crypto. However, volatility is still prominent with major coins’ trading volumes fluctuating much more than usual. 

Increased volatility is defining the current market. Volatility provides opportunities to profit but can also lead to severe losses. Make trades with a calculated approach to mitigate risk. If you want to see where prices are, take a look at the table of major currencies and their prices.

Is Aave a Good Investment?

Aave is a unique protocol that allows for the intersection of lending and crypto. However, it has strong competitors. If it can begin to set itself apart from its competitors, it can prove to be a powerful force in the crypto world.

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