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Finlaw Associates to Submit Draft Cryptocurrency Regulation to Indian Govt as Community Demands for Clarity, Mr. Mishra Explains

A prominent Indian law firm Finlaw Associates along with Estonian Crypto Association recently announced its intention to submit a representation to the Indian government regarding cryptocurrency regulations in the country. The representation will be submitted to the Government of India’s Finance and Law Ministries by the last week of February 2021. Currently, the absence of […]

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A prominent Indian law firm Finlaw Associates along with Estonian Crypto Association recently announced its intention to submit a representation to the Indian government regarding cryptocurrency regulations in the country. The representation will be submitted to the Government of India’s Finance and Law Ministries by the last week of February 2021.

Currently, the absence of clear regulations for the cryptocurrency and blockchain sector has created a lot of uncertainties for the community. So far, the government has adopted an ambiguous stance towards cryptocurrencies and blockchain sector as it publicly claims to adopt blockchain technology for governance while shunning the cryptocurrencies that actually make the distributed ledger operational in the first place.

According to Adv. P.M Mishra, the Managing Partner of Finlaw Associates, the proposed regulatory representation will include a paper that is more or less focused on regulations related to the existing FEMA Act, SEBI guidelines on Securities, CIS (Collective Investment Scheme), RBI, Income Tax and GST.

In his words, Mr. Mishra answers few questions that are prevalent in the country’s cryptocurrency community.

Q: Why did Finlaw Associates think of bringing such a proposal? What is its need?

Adv. Mishra: We all know the idiom, “Ignorance is Bliss”, which may be true for some but ask anyone in commerce or finance and they will make it abundantly clear that “Ignorance is Risk”. Each market embraces reasonable regulations to ensure transparency and fairness, but when it comes to the emergent fourth asset class – cryptocurrencies, there is no single regulator in India. Such a situation has created an atmosphere of uncertainty and confusion.

In the absence of clear regulations for cryptocurrencies and blockchain technology, businesses in the sector are impacted, innovation hindered, and the arising lack of accountability has encouraged cryptocurrency-related fraud and Ponzi schemes to thrive.

If India has to emerge as a wise leader that encourages innovation, entrepreneurship and squeeze maximum benefits from crypto and blockchain technology, it has to lead the way with a well-balanced regulatory framework for the industry.

Q: How is India losing due to the lack of Crypto regulations? What’s its impact on innovation?

A: Without clear regulations, cryptocurrency innovation in India is being stifled. Entrepreneurs sit on the sidelines for fear of innocently running afoul of the law while investors hang back because of uncertainty regarding valuations.  Meanwhile, India will suffer as other countries lure innovators away by framing rules that make their jurisdictions more favorable to cryptocurrencies. The government also risks allowing fraudulent purveyors of cryptocurrencies to drive out the good.

Apart from the intellectual brain drain and fraudulent activities, clear crypto regulations also encourage more people to adopt cryptocurrencies, increasing the volume of transactions. It, in turn, creates a potential to generate additional revenues in the form of direct as well as indirect taxes without burdening the community.

Q: What is new in your proposal? How is it different from other proposed stuff in different countries?

A: Unlike the previously framed draft crypto regulations, we request the government to ensure adequate participation from all the stakeholders. In our proposal, we encourage the creation of a self-regulatory body to promote and enforce standards among the cryptocurrency community. At the same time, an interagency working group including the representatives from the crypto community needs to be convened to harmonize the existing regulatory practices and develop a formal policy on cryptocurrencies.

We believe that it is important to keep the general public updated about the crypto regulations, especially since the whole premise behind the creation of cryptocurrencies is decentralization and democratization of finance. By issuing a public notice on the proposed rule governing cryptocurrencies, the government should receive comments from the public and if required, make necessary amendments based on the received feedback.

The government should also officially recognize the importance of decentralization and use it as a basis for determining whether a cryptocurrency is a security or not. Usually, any cryptocurrency with the highest levels of decentralization does not qualify as a security.

These steps will help to promote order, consistency, and accountability within the crypto market without imposing undue burdens. It will also help India as a country to emerge as a wise leader in the regulation of cryptocurrency, which will spur entrepreneurship and innovation in this country. After all, wisdom – more than ignorance – is a truer form of bliss.

Similarly, amendments in the Income Tax and GST laws would provide clarity on the applicability of tax and finally, the Indian Penal Code (IPC) along with IT laws would recognize specific acts as offenses in order to impose penalties.

Q: Do you think cryptocurrencies will become the future money?

A: Cryptocurrencies are increasingly being recognized as a medium for value exchange in many countries, with some governments even allowing their citizens to pay bills and taxes with them. It is just a matter of time before bitcoin and other cryptos are universally accepted.

The emergence of neo banks is gradually moving the entire banking operations online. It also offers a great deal of flexibility and a strong use case for the use of cryptocurrency in banking – an opening for digital assets to enter mainstream finance.

The resilience of cryptocurrencies is evident from the way BTC bounced back following the COVID situation across the globe. At the same time, other countries including China are showing more than expected interest in crypto as they work towards shaping the future alternative economy. The ongoing race is more the reason for India to jump in and not left behind.

In the end, what we would like to convey is that our country is desperately in need of fintech regulation related to crypto, AI, blockchain, and more to stop Ponzi scheme operators, cybercrimes, and financial terrorism as a whole.

Mr. Mishra can be reached at [email protected] or +91-9820907711

Source: https://www.newsbtc.com/news/company/finlaw-associates-to-submit-draft-cryptocurrency-regulation-to-indian-govt-as-community-demands-for-clarity-mr-mishra-explains/

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Mike Novogratz: Mark Cuban Shouldn’t Accept Doge

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How to Earn on Crypto you’re Hodling in 2021

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Everyone in the world likes money and even better if you can earn with the money you already have. There has been a sharp rise in crypto price points in recent months so if you’re one of the many die-hard holders out there you are probably wondering how you can get a return from the holdings you already have. Thankfully as the industry has evolved so has the ability for investors to earn on their holdings of crypto assets. This article will talk about some of the ways you can try to make a return on investment for everything you currently have in your portfolio. Some of the earning ways are conventional and others require a little bit of work or substantial knowledge. Nevertheless here are some ways you can earn on your crypto portfolio. 

Staking is the process of actively holding a small to substantial amount of funds in a designated blockchain wallet in order to support a proof of stake (PoS) blockchain protocol. Essentially the investor locks funds into a particular wallet to support the staking process of the blockchain which they are staking on. As with anything in life an individual only does something if they feel they will gain benefit from it so when it comes to staking a stakeholder in the proof of stake blockchain will only lock in their stake if they are going to receive a reward. Many blockchain platforms out there offer proof of stake rewards to those staking crypto in locked wallets and you can earn a staking reward from doing so. When staking you often do not only earn an income from locking in funds but the staking also offers the holder the ability to vote on the blockchains protocol updates. Think of it similar to having voting rights from holding stock in a public company, you will have the right to a proportional vote to your stake on the future of the blockchain protocol. It’s relatively easy to find a company that allows you to stake your crypto and even the big guys like Coinbase offer staking features on their platform.

Peer to peer lending has become an increasingly popular topic in the modern fintech sector these days and the normal financial channels often translate over into the cryptocurrency world. Like with conventional peer to peer lending the way you earn money from the transaction is through interest on the lending of assets. Unlike conventional peer to peer products, the cryptocurrency world offers substantially higher interest returns than its fiat (government issued currency) counterpart. This is not always the case however, but as a general rule of thumb you are set to earn more with a crypto-based lending house.

One trusted example of a medium for lending is Nexo. Nexo offers credit lines to a borrower that are secured against crypto collateral. This collateralized method does away with the need for traditional credit checks since the crypto acts as the bridge of trust if and when the borrower is unable to pay. So you are always safe as a lender in that regard. Nexo clients who deposit funds in fiat or stablecoins can expect to earn returns of up to 12%, whereas clients who directly deposit crypto can earn interest of up to 10% of their holdings. Lenders who hold a minimum percentage of their portfolio in NEXO tokens, and choose to receive payouts in their token are eligible to receive higher returns than those who do not. 

If you are interested in mining for more crypto, another option is to hold shares in an active cryptocurrency mine. Mining is the backbone of the entire cryptocurrency ecosystem. So by investing into a mine you are not only using your crypto to make more crypto, but you are also supporting the entire blockchain community through mining activities. 

Advertisement &  & 

Miners solve complex mathematical equations using graphics processors. Once the mathematical equation is solved, the block is validated and a reward is sent to the miner. Pylon Finance is said to have the largest active ETH mine in North America with return rates for investors of up to 250% per year. 

The easiest way of all to earn money from your crypto may be to deposit your funds into a platform that offers you an annual percentage yield (APY) on the money you hold on their platform. This is similar to depositing money into a savings account at a bank that gives you an annual percentage return on what you hold in your bank account. You can check out the different DeFi depositing options on DeFi Pulse and start earning on your holdings immediately. 

What is important to consider however is that depositing can only be done with crypto assets and altcoins and not fiat currency so this is only a valuable way to earn returns if you are insisting on earning on just your crypto holdings. 

In a similar fashion to earning from DeFi, many crypto exchanges offer earnings programs. These again are similar to depositing into bank accounts and earning interest with the key difference being that the interest earned is usually substantially higher than one would earn from a conventional bank account. That coupled with compounding interest and the gains in the crypto market in recent months makes this option very attractive. Companies such as Crypto.com offer interest on the major cryptocurrencies up to 8% and pay out interest on a weekly basis. Along with being paid weekly you also have your interest accrued daily so you know whatever you are holding is always earning you money, even if your portfolio fluctuates. 

Although it isn’t conventionally set to make you money, you can look to the slot machines and roulette table for extra returns. If you’re a rainman at blackjack, Fortunejack is the oldest Bitcoin casino in the world – so why not try to make some tasty returns there?


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DISCLAIMER Read More

The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

Checkout PrimeXBT
Trade with the Official CFD Partners of AC Milan
The Easiest Way to Way To Trade Crypto.
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Make your Money Grow with Mintos
Source: https://zycrypto.com/how-to-earn-on-crypto-youre-hodling-in-2021/

Checkout PrimeXBT
Trade with the Official CFD Partners of AC Milan
The Easiest Way to Way To Trade Crypto.
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Mark Cuban sees $1 written in DOGE’s tea leaves

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How to Earn on Crypto you’re Hodling in 2021

Advertisement &  & 

Everyone in the world likes money and even better if you can earn with the money you already have. There has been a sharp rise in crypto price points in recent months so if you’re one of the many die-hard holders out there you are probably wondering how you can get a return from the holdings you already have. Thankfully as the industry has evolved so has the ability for investors to earn on their holdings of crypto assets. This article will talk about some of the ways you can try to make a return on investment for everything you currently have in your portfolio. Some of the earning ways are conventional and others require a little bit of work or substantial knowledge. Nevertheless here are some ways you can earn on your crypto portfolio. 

Staking is the process of actively holding a small to substantial amount of funds in a designated blockchain wallet in order to support a proof of stake (PoS) blockchain protocol. Essentially the investor locks funds into a particular wallet to support the staking process of the blockchain which they are staking on. As with anything in life an individual only does something if they feel they will gain benefit from it so when it comes to staking a stakeholder in the proof of stake blockchain will only lock in their stake if they are going to receive a reward. Many blockchain platforms out there offer proof of stake rewards to those staking crypto in locked wallets and you can earn a staking reward from doing so. When staking you often do not only earn an income from locking in funds but the staking also offers the holder the ability to vote on the blockchains protocol updates. Think of it similar to having voting rights from holding stock in a public company, you will have the right to a proportional vote to your stake on the future of the blockchain protocol. It’s relatively easy to find a company that allows you to stake your crypto and even the big guys like Coinbase offer staking features on their platform.

Peer to peer lending has become an increasingly popular topic in the modern fintech sector these days and the normal financial channels often translate over into the cryptocurrency world. Like with conventional peer to peer lending the way you earn money from the transaction is through interest on the lending of assets. Unlike conventional peer to peer products, the cryptocurrency world offers substantially higher interest returns than its fiat (government issued currency) counterpart. This is not always the case however, but as a general rule of thumb you are set to earn more with a crypto-based lending house.

One trusted example of a medium for lending is Nexo. Nexo offers credit lines to a borrower that are secured against crypto collateral. This collateralized method does away with the need for traditional credit checks since the crypto acts as the bridge of trust if and when the borrower is unable to pay. So you are always safe as a lender in that regard. Nexo clients who deposit funds in fiat or stablecoins can expect to earn returns of up to 12%, whereas clients who directly deposit crypto can earn interest of up to 10% of their holdings. Lenders who hold a minimum percentage of their portfolio in NEXO tokens, and choose to receive payouts in their token are eligible to receive higher returns than those who do not. 

If you are interested in mining for more crypto, another option is to hold shares in an active cryptocurrency mine. Mining is the backbone of the entire cryptocurrency ecosystem. So by investing into a mine you are not only using your crypto to make more crypto, but you are also supporting the entire blockchain community through mining activities. 

Advertisement &  & 

Miners solve complex mathematical equations using graphics processors. Once the mathematical equation is solved, the block is validated and a reward is sent to the miner. Pylon Finance is said to have the largest active ETH mine in North America with return rates for investors of up to 250% per year. 

The easiest way of all to earn money from your crypto may be to deposit your funds into a platform that offers you an annual percentage yield (APY) on the money you hold on their platform. This is similar to depositing money into a savings account at a bank that gives you an annual percentage return on what you hold in your bank account. You can check out the different DeFi depositing options on DeFi Pulse and start earning on your holdings immediately. 

What is important to consider however is that depositing can only be done with crypto assets and altcoins and not fiat currency so this is only a valuable way to earn returns if you are insisting on earning on just your crypto holdings. 

In a similar fashion to earning from DeFi, many crypto exchanges offer earnings programs. These again are similar to depositing into bank accounts and earning interest with the key difference being that the interest earned is usually substantially higher than one would earn from a conventional bank account. That coupled with compounding interest and the gains in the crypto market in recent months makes this option very attractive. Companies such as Crypto.com offer interest on the major cryptocurrencies up to 8% and pay out interest on a weekly basis. Along with being paid weekly you also have your interest accrued daily so you know whatever you are holding is always earning you money, even if your portfolio fluctuates. 

Although it isn’t conventionally set to make you money, you can look to the slot machines and roulette table for extra returns. If you’re a rainman at blackjack, Fortunejack is the oldest Bitcoin casino in the world – so why not try to make some tasty returns there?


Get Daily Crypto News On Facebook | Twitter | Telegram | Instagram


DISCLAIMER Read More

The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

Checkout PrimeXBT
Trade with the Official CFD Partners of AC Milan
The Easiest Way to Way To Trade Crypto.
Check out Nord
Make your Money Grow with Mintos
Source: https://zycrypto.com/how-to-earn-on-crypto-youre-hodling-in-2021/

Checkout PrimeXBT
Trade with the Official CFD Partners of AC Milan
The Easiest Way to Way To Trade Crypto.
Source: https://coingenius.news/mark-cuban-sees-1-written-in-doges-tea-leaves/?utm_source=rss&utm_medium=rss&utm_campaign=mark-cuban-sees-1-written-in-doges-tea-leaves

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Aave is a decentralized, open-source, non-custodial liquidity protocol that enables users to earn interest on cryptocurrency deposits, as well as borrow assets through smart contracts.

Aave is interesting (pardon the pun) because interest compounds immediately, rather than monthly or yearly. Returns are reflected by an increase in the number of AAVE tokens held by the lending party. 

Apart from helping to generate earnings, the protocol also offers flash loans. These are trustless, uncollateralized loans where borrowing and repayment occur in the same transaction. 

Assets on Aave as of 3/7/21 (source: aave homepage)

Assets on Aave as of 3/7/21 (source: aave homepage)

The following article explores Aave’s history, services, tokenomics, security, how the protocol works, and what users should be wary of when using the Aave platform.

How Does Aave Work?

The Aave protocol mints ERC-20 compliant tokens in a 1:1 ratio to the assets supplied by lenders. These tokens are known as aTokens and are interest-bearing in nature. These tokens are minted upon deposit and burned when redeemed. 

These aTokens, such as aDai, are pegged at a ratio of 1:1 to the value of the underlying asset – that is Dai in the case of aDai. 

The lending-borrowing mechanism of the Aave lending pool dictates that lenders will send their tokens to an Ethereum blockchain smart contract in exchange for these aTokens — assets that can be redeemed for the deposited token plus interest.  

atokens on Aave

atokens on Aave

Borrowers withdraw funds from the Aave liquidity pool by depositing the required collateral and, also, receive interest-bearing aTokens to represent the equivalent amount of the underlying asset.

Each liquidity pool, the liquidity market in the protocol where lenders deposit and borrowers withdraw from, has a predetermined loan-to-value ratio that determines how much the borrower can withdraw relative to their collateral. If the borrower’s position goes below the threshold LTV level, they face the risk of liquidation of their assets.

Humble Beginnings as ETHLend 

Aave was founded in May 2017 by Stani Kulechov as a decentralized peer-to-peer lending platform under the name ETHLend to create a transparent and open infrastructure for decentralized finance. ETHLend raised 16.5 million US dollars in its Initial Coin Offering (ICO) on November 25, 2017.

Kulechov, currently serving also as the CEO of Aave, has successfully led the company into the list of top 50 blockchain projects published by PWC. Aave is headquartered in London and backed by credible investors, such as Three Arrows Capital, Framework Ventures, ParaFi Capital, and DTC Capital.

ETHLend widened its bouquet of offerings and rebranded to Aave by September 2018. The Aave protocol was formally launched in January 2020, switching to the liquidity pool model from a Microstaking model.

To add context to this evolution from a Microstaking model to a Liquidity Pool model, Microstaking was where everyone using the ETHLend platform. Whether one is applying for a loan, funding a loan, or creating a loan offer, they had to purchase a ticket to obtain the rights to use the application, and that ticket had to be paid in the platform’s native token LEND. The ticket was previously a small amount pegged to USD, and the total number of LEND needed varied based on the token’s value. 

In the liquidity pool model, Lenders deposit funds to liquidity pools. Thus creating what’s known as a liquidity market, and borrowers can withdraw funds from the liquidity pools by providing collateral. In case the borrowers become undercollateralized, they face liquidation.

Aave raised another 4.5 million US dollars from an ICO and  3 million US dollars from Framework Ventures on July 8th and July 15th, 2020. 

Aave Pronunciation

Aave is typically pronounced “ah-veh.” 

Aave’s Products and Services

The Aave protocol is designed to help people lend and borrow cryptocurrency assets. Operating under a liquidity pool model, Aave allows lenders to deposit their digital assets into liquidity pools to a smart contract on the Ethereum blockchain. In exchange, they receive aTokens — assets that can be redeemed for the deposited token plus interest.

Aave's functionality

Borrowers can take out a loan by putting their cryptocurrency as collateral. The liquidity protocol of Aave, as per the latest available numbers, is more than 4.73 billion US dollars strong. 

Flash Loans

Aave’s Flash loans are a type of uncollateralized loan option, which is a unique feature even for the DeFi space. The Flash Loan product is primarily utilized by speculators seeking to take advantage of quick arbitrage opportunities. 

Borrowers can instantly borrow cryptocurrency for a matter of seconds; they must return the borrowed amount to the pool within one transaction block. If they fail to return the borrowed amount within the same transaction block, the entire transaction reverses and undo all actions executed until that point. 

Flash loans encourage a wide range of investment strategies that typically aren’t possible in such a short window of time. If used properly, a user could profit through arbitrage, collateral swapping, or self-liquidation.

Rate Switching

Aave allows borrowers to switch between fixed and floating rates, which is a fairly unique feature in DeFi. Interest rates in any DeFi lending and borrowing protocol are usually volatile, and this feature offers an alternative by providing an avenue of fixed stability. 

For example, if you’re borrowing money on Aave and expect interest rates to rise, you can switch your loan to a fixed rate to lock in your borrowing costs for the future. In contrast, if you expect rates to decrease, you can go back to floating to reduce your borrowing costs.

Aave Bug Bounty Campaign

Aave offers a bug bounty for cryptocurrency-savvy users. By submitting a bug to the Aave protocol, you can earn a reward of up to $250,000.

Aave Tokenomics

The maximum supply of the AAVE token is 16 million, and the current circulating supply is a little above 12.4 million AAVE tokens.

Initially, AAVE had 1.3 billion tokens in circulation. But in a July 2020 token swap, the protocol swapped the existing tokens for newly minted AAVE coins at a 1:100 ratio, resulting in the current 16 million supply. Three million of these tokens were kept in reserve allocated to the development fund for the core team. 

Aave’s price has been fairly volatile, with an all-time high of $559.12 on February 10, 2021. The lowest price was $25.97 on November 5th, 2020. 

Aave Security

Aave stores funds on a non-custodial smart contract on the Ethereum blockchain. As a non-custodial project, users maintain full control of their wallets. 

Aave governance token holders can stake their tokens in the safety module, which acts as a sort of decentralized insurance fund designed to ensure the protocol against any shortfall events such as contract exploits. In the module, the stakers can risk up to 30% of the funds they lock in the module and earn a fixed yield of 4.66%. 

The safety module has garnered $375 million in deposits, which is arguably the largest decentralized insurance fund of its kind. 

Final Thoughts: Why is Aave Important?

Aave is a DeFi protocol built on strong fundamentals and has forced other competitors in the DeFi space to bolster their value propositions to stay competitive. Features such as Flash loans and Rate switching offer a distinct utility to many of its users.

Aave emerged as one of the fastest-growing projects in the Summer 2020 DeFi craze. At the beginning of July 2020, the total value locked in the protocol was just above $115 million US dollars. In less than a year, on February 13, 2021, the protocol crossed the mark of 6 billion US dollars. The project currently allows borrowing and lending in 20 cryptocurrencies.

Aave is important because it shows how ripe the DeFi space is for disruption with new innovative features and how much room there is to grow.

Checkout PrimeXBT
Trade with the Official CFD Partners of AC Milan
The Easiest Way to Way To Trade Crypto.
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Source: https://coincentral.com/what-is-aave/

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Trade with the Official CFD Partners of AC Milan
The Easiest Way to Way To Trade Crypto.
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Chinese Crypto Purchases Signal Asian Corporate Attention

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Aave is a decentralized, open-source, non-custodial liquidity protocol that enables users to earn interest on cryptocurrency deposits, as well as borrow assets through smart contracts.

Aave is interesting (pardon the pun) because interest compounds immediately, rather than monthly or yearly. Returns are reflected by an increase in the number of AAVE tokens held by the lending party. 

Apart from helping to generate earnings, the protocol also offers flash loans. These are trustless, uncollateralized loans where borrowing and repayment occur in the same transaction. 

Assets on Aave as of 3/7/21 (source: aave homepage)

Assets on Aave as of 3/7/21 (source: aave homepage)

The following article explores Aave’s history, services, tokenomics, security, how the protocol works, and what users should be wary of when using the Aave platform.

How Does Aave Work?

The Aave protocol mints ERC-20 compliant tokens in a 1:1 ratio to the assets supplied by lenders. These tokens are known as aTokens and are interest-bearing in nature. These tokens are minted upon deposit and burned when redeemed. 

These aTokens, such as aDai, are pegged at a ratio of 1:1 to the value of the underlying asset – that is Dai in the case of aDai. 

The lending-borrowing mechanism of the Aave lending pool dictates that lenders will send their tokens to an Ethereum blockchain smart contract in exchange for these aTokens — assets that can be redeemed for the deposited token plus interest.  

atokens on Aave

atokens on Aave

Borrowers withdraw funds from the Aave liquidity pool by depositing the required collateral and, also, receive interest-bearing aTokens to represent the equivalent amount of the underlying asset.

Each liquidity pool, the liquidity market in the protocol where lenders deposit and borrowers withdraw from, has a predetermined loan-to-value ratio that determines how much the borrower can withdraw relative to their collateral. If the borrower’s position goes below the threshold LTV level, they face the risk of liquidation of their assets.

Humble Beginnings as ETHLend 

Aave was founded in May 2017 by Stani Kulechov as a decentralized peer-to-peer lending platform under the name ETHLend to create a transparent and open infrastructure for decentralized finance. ETHLend raised 16.5 million US dollars in its Initial Coin Offering (ICO) on November 25, 2017.

Kulechov, currently serving also as the CEO of Aave, has successfully led the company into the list of top 50 blockchain projects published by PWC. Aave is headquartered in London and backed by credible investors, such as Three Arrows Capital, Framework Ventures, ParaFi Capital, and DTC Capital.

ETHLend widened its bouquet of offerings and rebranded to Aave by September 2018. The Aave protocol was formally launched in January 2020, switching to the liquidity pool model from a Microstaking model.

To add context to this evolution from a Microstaking model to a Liquidity Pool model, Microstaking was where everyone using the ETHLend platform. Whether one is applying for a loan, funding a loan, or creating a loan offer, they had to purchase a ticket to obtain the rights to use the application, and that ticket had to be paid in the platform’s native token LEND. The ticket was previously a small amount pegged to USD, and the total number of LEND needed varied based on the token’s value. 

In the liquidity pool model, Lenders deposit funds to liquidity pools. Thus creating what’s known as a liquidity market, and borrowers can withdraw funds from the liquidity pools by providing collateral. In case the borrowers become undercollateralized, they face liquidation.

Aave raised another 4.5 million US dollars from an ICO and  3 million US dollars from Framework Ventures on July 8th and July 15th, 2020. 

Aave Pronunciation

Aave is typically pronounced “ah-veh.” 

Aave’s Products and Services

The Aave protocol is designed to help people lend and borrow cryptocurrency assets. Operating under a liquidity pool model, Aave allows lenders to deposit their digital assets into liquidity pools to a smart contract on the Ethereum blockchain. In exchange, they receive aTokens — assets that can be redeemed for the deposited token plus interest.

Aave's functionality

Borrowers can take out a loan by putting their cryptocurrency as collateral. The liquidity protocol of Aave, as per the latest available numbers, is more than 4.73 billion US dollars strong. 

Flash Loans

Aave’s Flash loans are a type of uncollateralized loan option, which is a unique feature even for the DeFi space. The Flash Loan product is primarily utilized by speculators seeking to take advantage of quick arbitrage opportunities. 

Borrowers can instantly borrow cryptocurrency for a matter of seconds; they must return the borrowed amount to the pool within one transaction block. If they fail to return the borrowed amount within the same transaction block, the entire transaction reverses and undo all actions executed until that point. 

Flash loans encourage a wide range of investment strategies that typically aren’t possible in such a short window of time. If used properly, a user could profit through arbitrage, collateral swapping, or self-liquidation.

Rate Switching

Aave allows borrowers to switch between fixed and floating rates, which is a fairly unique feature in DeFi. Interest rates in any DeFi lending and borrowing protocol are usually volatile, and this feature offers an alternative by providing an avenue of fixed stability. 

For example, if you’re borrowing money on Aave and expect interest rates to rise, you can switch your loan to a fixed rate to lock in your borrowing costs for the future. In contrast, if you expect rates to decrease, you can go back to floating to reduce your borrowing costs.

Aave Bug Bounty Campaign

Aave offers a bug bounty for cryptocurrency-savvy users. By submitting a bug to the Aave protocol, you can earn a reward of up to $250,000.

Aave Tokenomics

The maximum supply of the AAVE token is 16 million, and the current circulating supply is a little above 12.4 million AAVE tokens.

Initially, AAVE had 1.3 billion tokens in circulation. But in a July 2020 token swap, the protocol swapped the existing tokens for newly minted AAVE coins at a 1:100 ratio, resulting in the current 16 million supply. Three million of these tokens were kept in reserve allocated to the development fund for the core team. 

Aave’s price has been fairly volatile, with an all-time high of $559.12 on February 10, 2021. The lowest price was $25.97 on November 5th, 2020. 

Aave Security

Aave stores funds on a non-custodial smart contract on the Ethereum blockchain. As a non-custodial project, users maintain full control of their wallets. 

Aave governance token holders can stake their tokens in the safety module, which acts as a sort of decentralized insurance fund designed to ensure the protocol against any shortfall events such as contract exploits. In the module, the stakers can risk up to 30% of the funds they lock in the module and earn a fixed yield of 4.66%. 

The safety module has garnered $375 million in deposits, which is arguably the largest decentralized insurance fund of its kind. 

Final Thoughts: Why is Aave Important?

Aave is a DeFi protocol built on strong fundamentals and has forced other competitors in the DeFi space to bolster their value propositions to stay competitive. Features such as Flash loans and Rate switching offer a distinct utility to many of its users.

Aave emerged as one of the fastest-growing projects in the Summer 2020 DeFi craze. At the beginning of July 2020, the total value locked in the protocol was just above $115 million US dollars. In less than a year, on February 13, 2021, the protocol crossed the mark of 6 billion US dollars. The project currently allows borrowing and lending in 20 cryptocurrencies.

Aave is important because it shows how ripe the DeFi space is for disruption with new innovative features and how much room there is to grow.

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Source: https://coincentral.com/what-is-aave/

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Source: https://coingenius.news/chinese-crypto-purchases-signal-asian-corporate-attention/?utm_source=rss&utm_medium=rss&utm_campaign=chinese-crypto-purchases-signal-asian-corporate-attention

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