AAVE protocol is now live on the Ethereum mainnet. It’s offering 16 different assets for lending and borrowing.
The latter will power the AAVE oracle network. As per the announcement, “AAVE is the first lending protocol to leverage off-chain pricing data for calculating lending rates using a decentralized network of price oracles.”
Also, the protocol introduces a fixed rate for short-term loans. The users can choose from 16 different assets with 5 stablecoins among them.
Integration with Chainlink will enable the company to obtain actual market prices from all the leading platforms. Besides, the partnership will allow LINK holders to use this token as collateral on the AAVE protocol.
How does the AAVE protocol operate?
The British company offers a flash loan for immediate borrowing without collateral. This process takes place in one transaction. That said, the working capital returns to the pool of funds until the completion of the transaction. So if a user defaults on the loan, the system cancels the transaction. Accordingly, previous operations become invalid as well, thereby ensuring the safety of funds in the reserve pool.
Besides, AAVE protocol offers a fresh tokenization model. “Instead of being defined by an exchange rate against the underlying asset, the company 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.”
The company is going to disclose new features of aTokens very soon.
So the number of Chainlink’s partners is growing. Just recently it started a collaboration with Loopring.