AAVE, the world’s largest Decentralized Funding Protocol (DeFi), is now available in Crypto IRA / 401k retirement accounts.
What is AAVE?
Founded in November 2017 and previously known as ETHLend, Aave was founded by Stani Kulechov. It is one of the DeFi primitives and a building block of the new decentralized financial system based on smart contracts. It relates to the automated non-custodial lending / borrowing aspect and is firmly integrated with most other protocols.
Aave is a Finnish word meaning “ghost”. As such, it alludes to the open and transparent nature of the protocol. There are around 20 cryptocurrencies available on the platform (including ETH, DAI, UNI, USDC, MATIC, etc.), which lenders can provide to earn compound interest and receive tokens marked A (aETH, aUSDC , etc.), which generates a higher yield on time.
Lenders also receive a percentage of flash loan fees, which are unsecured loans, which must be repaid in one lump sum. Then there are the borrowers, mortgaging the assets, to receive loans for different purposes. They pay interest over time which is paid to the lenders and the interest rate varies according to supply / demand.
There are collateralisation ratios, liquidation thresholds and liquidation penalty parameters. Aave has no vesting period and withdrawals can be made at any time. A new version of the protocol, specially designed for institutional entities and the business world, should be launched soon. It will feature authorized KYC access to special liquidity pools, anti-fraud / money laundering protection by Fireblocks, existing separately from public pools while benefiting from them.
What makes AAVE so unique?
Aave is essentially a decentralized bank, offering the facility of lending / borrowing and creating a credit market, in addition to the blockchain. Its main feature is that you don’t have to fill out any paperwork or take an extended KYC before you start using it. In addition, it is not a custodian and the assets are managed through complex self-executing logic instruments – smart contracts.
This means that there is no possible way to censor all financial activity on Aave and no one can defraud lenders / borrowers. It is more transparent and open than a traditional financial institution and can be independently audited to prove compliance with protocol rules and / or asset verification.
What gives AAVE the value of the token?
AAVE, formerly LEND, is the native token of the Aave protocol. It is used for governance (voting on proposals), incentives and mitigation tools. Token holders can vote on governance and protocol upgrade proposals.
AAVE’s long-term value proposition is the ability for token holders to vote cash flow, which will potentially provide constant cash flow to holders.
AAVE in retirement accounts
Investors who believe in the long term AAVE and decentralized finance may seriously consider purchasing the asset in their retirement accounts. This will not only give them huge tax savings, but also let them know that they are positioning their investments for the future of finance.
AAVE is now available to invest in IRA / 401k Qualified Retirement Accounts at iTrustCapital.