How to buy Aave online
This beginner’s guide gives you the background on the Aave cryptocurrency. We explore how the lending platform works, why it has value, and look at how to get your hands on some coins.
Compare where to buy Aave, and open an account
If you are already familiar with Aave and want to invest straight away, follow one of the links below to reach one of our trusted and recommended brokers. If you want more information on Aave, read on.
What is Aave?
Aave is a cryptocurrency lending platform and AAVE is the platform’s governance token. It utilises lending pools so users can borrow, deposit, repay, redeem, flash loan, or swap a variety of cryptocurrencies. Aave runs on top of the Ethereum blockchain and is now one of the largest Ethereum lending systems, with users being able to lend and borrow money directly from other people via peer-to-peer connections without the need for a middleman.
A Swiss company, Aave was founded in 2017 by Stani Kulechov. It raised $16.2m in an ICO (initial coin offering) and was originally named ETHLend using the LEND token for governance. The firm eventually changed the name of its governance token to AAVE. There are rival cryptocurrency lending platforms, such as CoinLoan, but Aave aims to set itself apart by making instant loans and new debit/credit formats accessible to all. Having compiled $158m in total deposits so far, it has grown rapidly.
How does Aave work?
Aave allows users to loan and borrow money using lending pools. Lenders deposit funds into each pool, and borrowers can draw from them for loans, which are reinforced by the security of a smart contract. Aave allows flash loans to be taken out quickly and securely by users; blockchain technology can verify transactions quickly rather than conventional bank loans that rely on a middleman who may take weeks to respond to your loan request.
Borrowers post collateral, and borrowing limits are set at the amount of collateral posted. To incentivise lenders, they are able to redeem interest on deposits. The lending experience is seamless for users because they can post collateral and gain exposure to completely different cryptocurrencies without owning them outright. For example, users can post collateral in Basic Attention Tokens but borrow in Ethereum.
Users who borrow AAVE are not charged a fee for loans denominated in AAVE, and borrowers who use AAVE as collateral are able to enjoy a discount on fees and an increased borrowing limit. For more on the basics of cryptocurrencies, read our introduction to cryptocurrency.
How to buy AAVE online – step-by-step guide
Step 1. Find an exchange
There are various online cryptocurrency exchanges to choose from. Narrow your search down by checking our detailed reviews of all your options or selecting a service from the table at the top of this page. Here are two of the best places to buy Aave coins.
- Binance: One of the biggest exchanges in the cryptocurrency space, Binance allows users to exchange hundreds of different cryptocurrencies, including AAVE. Open a Binance account today >
- ChangeHero: Combining the user-friendly interface of smaller crypto exchanges with the reliability of larger exchanges, Changehero allows you to exchange a variety of cryptos for AAVE quickly and anonymously. You can open an account by clicking here >
Step 2. Sign up and fund your account
Before using an exchange, you will usually have to sign up. This often involves an identity verification check that varies from platform to platform. It will commonly involve providing a copy of a photo ID.
Many exchanges now accept payments in fiat currency, or you can fund your account with cryptocurrency. If you want to fund your transaction with cryptocurrency, you can use a cryptocurrency exchange like Coinbase to get Bitcoin and transfer it to your account.
Step 3. Purchase
Once your exchange account is set up and funded, you will be able to exchange the cryptocurrency in your account for AAVE. If your account is loaded with Bitcoin, head over to the exchange to check the current price of AAVE in the AAVE/BTC crypto pair. Then, you can execute your transaction.
Step 4. (Optional) Get a suitable wallet
For enhanced security, get your own AAVE wallet, which functions much like a Bitcoin wallet: you can transfer your AAVE tokens into it to keep them safe. This step is not essential, and most exchanges will allow you to hold your coins within your account. The only real reason to consider this is if you are planning on buying and holding a large amount of AAVE for the long term.
- Infinito Wallet: With a team of over 20 blockchain experts and a variety of supported cryptocurrencies, Infinito Wallet is a good wallet for you to store AAVE securely and easily. Create a secure Infinito Wallet now >
- Freewallet: Hold more than 100 different cryptos and access them quickly using Freewallet. This wallet is easy to open and easy to use, making it a great candidate for storing your AAVE tokens. Open a Freewallet today >
How to trade AAVE – step-by-step guide
Step 1. Find a broker
If you want to trade AAVE quickly by taking advantage of short-term market fluctuations, you need to be able to open and close positions quickly, and brokers make this possible.
The most important thing to check before signing up is whether or not your broker offers AAVE. Because it’s a smaller coin, AAVE can be more difficult to access than more expensive and established cryptocurrencies. Plus500 and eToro are two of the best crypto brokers around because they support a large number of tokens and coins.
Step 2. Deposit money
You can fund your account using fiat currency (such as GBP, EUR, and USD) and use this to trade crypto. However, make sure you watch out for trading fees when using these services.
Step 3. Decide how you’d like to trade
The two most commonly used methods for trading with an online broker are spread betting and contracts for difference (CFDs). Make sure you learn more about these methods before you start trading AAVE.
Step 4. Start trading
Once your account has been set up and funded, you’re ready to go. If you are a novice, we highly recommend starting with a demo account so you can learn the basics of cryptocurrency trading without risking any of your money.
When you move on to real money, you have to decide whether to ‘go long’ or ‘short’. A long position is when you invest in the belief that an asset (in this instance, AAVE) will rise in value. Going short (or shorting) is when you invest your money in the belief that an asset will fall in value.
One additional strategy available with online brokers is to use leverage. This technique allows you to make large trades with a smaller initial deposit (known as the margin). However, we recommend that beginners avoid using leverage because it significantly increases the risks of losing large amounts of capital if the market moves against you.
It is always advisable to take your time considering any potential investment. This is especially true for Aave. Here is a list of pros and cons to consider when investing in Aave, along with some key questions to ponder.
- The low-cost of AAVE means that getting in early could lead to sizable rewards down the line
- Consistently competitive fees
- Flash loans feature offers instantly issued and settled loans via blockchain technology
- AAVE is in finite supply that is constantly being destroyed, increasing the token’s rarity
- Safety module mitigates risks of shortfall events
- Great range of cryptocurrencies and innovative products
- More obscure and less accessible than more conventional cryptocurrencies
- AAVE is not an ideal choice for beginners because there is less information available about it than some of the more established cryptocurrencies like Bitcoin and Ethereum
Still not sure? Here are three more things to consider before you decide to invest in Aave.
1. Is now a good time to buy AAVE?
It entirely depends on your investment outlook: is it long-term or short-term? In the long term, investing in AAVE could prove profitable because its lending pool services could become increasingly popular as decentralised finance (DeFi) becomes more popular. In this case, the price of AAVE would be likely to increase.
If you would rather trade AAVE in the short-term, the long term vision of Aave is less significant. Instead, you will want to gain a full understanding of the technical indicators that can keep you one step ahead. Playing close attention can lead to sizable rewards as the market fluctuates.
Invezz keeps you up-to-date with the latest news in the cryptocurrency space. For our most recent analysis on Aave and how this might affect the value of AAVE tokens, check out the articles below:
Aave (AAVE) could advance even more in the ongoing bull market. Here are the next targets for buyers
Uniswap, Tezos, Aave price analysis roundup
Aave (AAVE) price could explode again in March but the risk remains high
2. What problem does Aave solve, and what are its investment prospects?
Aave solves the slow and expensive nature of centralised lending platforms. Borrowers no longer have to wait to get their loan funded because they can deposit their collaterals to borrow against them instantly, and they can borrow at either a variable or fixed interest rate. Additionally, lenders are able to earn a passive income because Aave monitors repayments and liquidations for them.
In the future, Aave’s services could make lending more accessible to regular people and disrupt the monopoly that banks conventionally have on lending. However, whilst unsecured and decentralised borrowing services present great accessibility, there can be risks, which was evidenced in the hacking attack on margin trading protocol, bZx.
For Aave to continue its success, it must successfully mitigate default risk. Opium’s introduction of a credit default swap (CDS) to the Aave protocol in August 2020 should help matters. Aave must remain cautious as it scales up. You can read the most recent news about Aave below to stay informed about your investment:
Aave (AAVE) is the latest DeFi protocol to implement Layer-2
Is Aave a good investment? DeFi sector stays strong despite the market downturn
Is Aave (AAVE) a buy or sell in January?
3. Do you want to hold Aave for the long term?
Holding it for long periods of time compared to spinning it fast in the hope of a quick profit each have their pros and cons. Both the market conditions and your own strategy are key to being successful at either one. Here are some final considerations for each approach.
Considerations for a long term investment strategy
If you believe that Aave’s best days are in the future, you want to get in early by signing up to an exchange. Depending on how long you plan to hold your crypto assets, a personal wallet may be useful for storage purposes. Fundamental analysis is the key to long-term investment success.
Considerations for a short term trading strategy
If you want to trade AAVE quickly to make a fast profit from fluctuations in the cryptocurrency market, the overall strength of the asset and its long-term trend is not as important. Instead, you should sign up to a broker with low fees, and learn how to anticipate price movements by reading charts.