Aave protocol with their native token AAVE is a decentralized financial platform that allows people to lend and lend crypto assets.
With the Aave protocol, users have more choices because Aave allows users to borrow and lend around 20 crypto assets, including:
- DAI
- ETH
- BAT
- LINK
- USDT, and other crypto assets.
To that end, Aave issues two types of tokens. First are a Tokens which are released to lenders so that they can collect interest on their deposits. While the second token is AAVE which is the original Aave token.
The AAVE crypto asset offers several advantages. For example, Aave borrowers are not charged a fee if they take out a loan in tokens. In addition, borrowers who use AAVE as collateral will also get a fee discount.
Loans are made on condition that liquidity is returned to the pool before the transaction ends. If it is not settled by that time, the transaction will be canceled which will also effectively undo any actions taken up to that point.
Another feature that is owned by Aave is Rate Switching. This feature allows borrowers to switch between fixed and floating rates. Fixed interest rates can provide certainty about costs during times of volatility in the crypto market. Meanwhile, variable interest rates can be useful if borrowers think that prices will fall in the near future. This scheme is especially useful in volatile decentralized markets.
