We’re ringing in the New Year with some big news! It’s the moment we’ve all been waiting for… We are excited to announce that, after countless days of tireless work the Aave protocol has launched on the Ethereum mainnet! Be sure to check out Aave protocol and all our innovative tools for an open financial ecosystem here.
Cool New Features
Flash loans are one of the most innovative features of Aave protocol. With flash loans, you can borrow instantly and easily, no collateral needed. Designed for developers/people with some technical knowledge, flash loans enable a customized smart contract to borrow assets from our reserve pools within one transaction on the condition that the liquidity is returned to the pool before the transaction ends. If this does not happen, the transaction is reversed to effectively undo the actions executed until that point, guaranteeing the safety of the funds in the reserve pool.
The Aave protocol introduces an innovative tokenization model compared to the current interest bearing tokens available on the market like cDAI/Chai. Instead of being defined by an exchange rate against the underlying asset, the Aave interest bearing tokens (aTokens for short) are pegged 1:1 to the value of the underlying asset, and they increase in balance rather than in value. You can see your balance grow in your wallet! Besides that, Aave tokens will be much more user friendly, as transferring them or exchanging them with the underlying asset will be super easy! There are a lot of features that we are introducing with the aTokens, and they will be unveiled in the next few days. Make sure to follow us on our media channels to not miss anything!
Aave protocol introduces a new interest rate model for borrowers called stable rate model. Stable rateloans behave as a fixed rate loan in the short-term but can be re-balanced in the long-term to respond to severe changes in market conditions. This helps protect borrowers against the volatility of variable interest rates.
Rate switching helps you get the best interest rates possible by allowing you to switch between stable and variable rates.
Perpetual loans give users the freedom to get liquidity from their deposits without any duration or repayment schedule. This is made possible by the over-collateralization of all loans, which is the heart of decentralized finance.
Finally, we have 16 different assets, 5 of which are stablecoins, available to be deposited/borrowed in Aave protocol: BAT, DAI, ETH, KNC, LEND, LINK, MANA, MKR, REP, TUSD, USDC, USDT, WBTC, ZRX, SUSD, and SNX.
The Aave Oracle Powered by Chainlink
We are also excited to announce the launch of the Aave Oracle, powered by Chainlink and securing 15 cryptocurrency price feeds! Aave is the first lending protocol to leverage off-chain data for calculating lending rates using a decentralized network of price oracles, making this a momentous step for DeFi. Working with Chainlink ensures that Aave protocol is decentralized through and through, including our oracle system.
Aave protocol introduces the burning of the LEND token — all fees of the protocol are redirected to burn the LEND token.
The protocol fees are as follows:
When borrowing, the fee is 0.025% of the loan amount on loan origination.
For flash loans, a small fee of 0.35% is applied on loan origination, split in 70% for the lenders and 30% for the protocol.
Aave protocol has been built with decentralization in mind. We plan to be the first open source lending market protocol in which the decisional power is in the hand of the users, specifically the LEND token holders. The governance has been built and is currently in the process of being thoroughly tested and audited. Aave will keep the ownership of the protocol in this initial launch phase in order to be able to react quickly to any potential issue that should arise. As soon as the governance is ready to be released, we will migrate the ownership to the governance contracts, where LEND holders will be able to vote on smart contract updates and configuration changes. In the upcoming weeks, we will publish a detailed roadmap of the ownership migration with a focus on the voting process and the dynamics involving the LEND token.
We have been auditing our protocol throughout the development process to prevent any severe flaws in the codebase. We already published the initial report by Trail of Bits, and we also asked OpenZeppelin to help us by auditing a preproduction version of the protocol, with specific focus on spotting vulnerabilities and improve the development flow. The report by OpenZeppelin will be published in the next few days. In the meantime, we are proceeding with more audits and we plan to bring Aave protocol to the highest security standards. For everyone interested in catching some bugs, we will be releasing an ongoing bug bounty program soon so stay tuned 😊
Licensing and Open Source
At Aave we look at software licensing as the first pillar of decentralization. Therefore, to give certainty and we decided to publish the Aave protocol under the AGPL3 License. As DeFi scales, we believe that it is our responsibility to make sure the foundations of this new economy are open both technically and legally. It allows us to stay true to our value while giving more certainty to developers looking to create a business model on Aave Protocol and ensuring the widest distribution of the protocol.
If you’re a developer, the Aave Developers Portal has all the documentation you need for building on and integrating Aave protocol.