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DeFi Slate Fam:
A new week is upon us in the DeFi world. Last week was filled with airdrops, huge progress, a huge KuCoin hack & more.
An exchange hack is even MORE of a reason to have full custody of your assets.
To use DeFi protocols & hold your own funds, placing your faith in smart contracts rather than other people (sounds kinda dark, doesn’t it?).
So, were gonna start this week off with a tutorial on how to use Aave to leverage your assets and earn passive income. To me, Aave is a decentralized, slightly-risky savings account. You can earn really solid APYs on stablecoins aUSDC, aDAI, aUSDT!
With the traditional Chase Bank interest rates at about 0.01% per year, the 3-6% Aave offers on stablecoins really makes you wonder…what the hell am I doing?
Time to make some moves.
3-7% stablecoin APY, lend and borrow, your decentralized savings account in Aave
Aave is like using a decentralized 24/7 workhorse for your money. Its the go-to money market tool in the DeFi world with a whopping $1.64B in TVL. There aren’t many better teams out there with Stani & Marc always crushing it building new products and more features.
Lets dive into a quick update on the state of Aave via an excerpt from the guest post Isa, the marketing lead @ Aave, graciously wrote on our newsletter a few weeks ago:
Aavenomics & Governance — A Move Toward Decentralization
In the immediate future, Aave will be moving toward a more decentralized protocol where the governance is in the hands of the users. The Aavenomics proposal was released recently, which highlights the token migration from LEND to AAVE, Aave Improvement Proposals (AIPs), voting and governance, and the Safety Module. The governance is currently on the Ropsten testnet, and the community is welcome to test it out.
The first vote on mainnet will be on the migration from LEND to AAVE!
Credit Delegation– Synergies with “OldFi”
For the full rundown on Credit Delegation, Stani wrote a great one here. Essentially, Credit Delegation allows party A to deposit in Aave and then delegate their credit line to Party B who can borrow without needing to put up their own collateral. The terms and conditions are all decided in a legal agreement with OpenLaw. The first Credit Delegation has already happened with DeversiFi as the borrower, a momentous step forward.
Credit Delegation makes DeFi into a source of liquidity for all of finance. For example, a depositor could be a DeFi fund looking for credit exposure, and borrowers could be businesses, NGOs, institutions, etc. The future of DeFi is interoperable with OldFi.
Aave V2 was announced recently, with many new features to make the Aave Protocol push the limits of what’s possible with DeFi.
These features include (full list and more detailed explanations in this blog post):
- Repay with collateral
- Debt tokenization and native credit delegation
- Fixed rate deposits
- Private markets (including a collaboration between the Aave Protocol and RealT to bring mortgages on Ethereum!)
- Gas optimisations
- Native trading functionalities (debt trading, collateral trading, margin trading)
- Governance in hands of users (vote delegation, cold wallet voting)
And, the progress so far? Right on track.
Aave governance launched on-chain with the first proposal being created & voted on in the last few days!
Aave Governance is officially on mainnet, giving the decisional power to the community! Now it’s time to vote on the very first Aave Improvement Proposal (AIP) for the token migration from $LEND to $AAVE.
Thread on how to vote⬇️
Blog post for details: https://t.co/Z09ajBmb2Y
— Aave (@AaveAave) September 25, 2020
And the voting has started for the transition from $LEND to $AAVE, a much needed change for the branding and decentralization of Aave!
– 65 000 000 LEND threshold passed 🙌🏽
– Over 637 holders voted until now 👻
– Still time to vote 🗳️ pic.twitter.com/rhJEbRYmgC
— stani.eth (👻,🌿) (@StaniKulechov) September 28, 2020
And of course, the credit delegation market has hit the ground running with Opium Team!
Opium Team brings insurance to the credit delegation market. We are excited to present to you the FIRST Credit Default Swap on @AaveAave Credit Delegation. It is live on Opium Exchange
— Opium (@Opium_Network) August 22, 2020
Alrighty y’all – now lets get into the good stuff! Lets leverage our assets and earn some yield with Aave!
Earn Yield By Supplying Assets To Aave (Similar to Compound):
Step 2: Choose which assets you’d like to supply to Aave, for this example we’ll use ETH because we have some. When you click the asset you want to supply, you’ll be taken here (ignore the health factor, yours will be different):
Step 3: Choose the amount you’d like to deposit, press ‘Submit’ then approve the spending + deposit transactions in metamask then you’re all set! You can click on the dashboard button on the left panel to see your deposits.
Borrowing Assets On Aave:
Step 1: You must have deposited some type of asset as supply first – do not continue until you have done so.
Step 2: On the left side of the dashboard, click ‘Borrow’ and find the asset which you would like to borrow. Then you’ll be prompted to this screen, where you’ll choose how much you want to borrow (we recommend keeping it below 55-60%, you can see ours is 53%). Different assets have different borrowing abilities, but for all intents and purposes keeping below 60% of your borrow limit is a “safe” strategy.
Step 3: When you press continue you’ll be prompted to a screen asking what type of interest rate you want, make your choice (stable stays the same – variable can change up and down)
Step 4: Then on the next screen, approve the borrow transaction & wait, then when prompted click submit and follow through the MetaMask transaction to borrow then you’ll see the asset you chose to borrow appear in your Metamask wallet.
Step 5: Click the dashboard button on the left panel & you can then review your assets supplied/borrowed – congrats!
🙌 Together with:
It’s officially time to start testing the first version of Synonym. Break things, provide feedback, and of course, get rewarded.👉🏽 Here
Off-chain governance. On-chain execution. Optimistically execute governance transactions on-chain where your community can approve them. Check it out Here!
The Rollup Report 📰📊📈
⚠️ DISCLAIMER: Investing in cryptocurrency and DeFi platforms comes with inherent risks including technical risk, human error, platform failure and more. At certain points throughout this post, we might get a commission for promoting certain projects, if this is the case we will always make sure it is clear. We are strictly an educational content platform, nothing we offer is financial advice. We are not professionals or licensed advisors.