Aave is one of the most popular decentralized finance (DeFi) projects. Recently, the AAVE team has announced its V2 Kovan testnet on their Medium page. Any interested users can test the platform using the link here.
In our previous article, we have made a detailed guide on How to use the AAVE platform.
Recently, the platform was in the headlines for attaining a whopping $1 billion in total valued locked (TVL), following that it has now become the second DeFi platform to achieve this milestone.
And now with this V2 upgrade, it is planning to offer a better user experience, along with new and improved trading facilities.
Upcoming Features With V2
According to the Medium post, the platform is going to embed these following features with the V2 upgrade.
- Repay with collateral
- Debt tokenization and native credit delegation
- Fixed-rate deposit
- Improved stable borrow rate
- Private markets
- Improved aTokens
- Gas optimizations
Native Trading Functionalities
- Debt trading
- Collateral trading
- Margin trading
- Vote delegation
- Cold wallet voting
- Distribution of governance power to users
Kindly note the platform currently supports testing in regards to user interface and gas consumption and will allow the integrator to start building the application with the upgraded features. The above-mentioned features will either be added to the V2 testnet after some time or will be directly added to the mainnet. We will update this guide once these features will be available.
Prerequisites for Testnet
- Set your network in the MetaMask wallet to “Kovan Test Network.”
- Request Kovan ETH for testing using the link here.
- Test tokens from the test client faucet.
Go to the testnet page.
The testnet supports many wallets through which you can connect and test the platform.
Connect your MetaMask wallet.
The landing page looks like this.
The wallet is connected, and the network is selected as the Kovan test network. We have already received some test ETH in our wallet.
Important: The AAVE V2 testnet only supports the AAVE market.
Receive Test Tokens in Your Wallet
To get the test tokens in your wallet and dashboard, just go to the More-> Faucet. Select your desired token and submit the request.
You will get the requested tokens in the Deposit tab.
You can see the list of all available tokens to the platforms from the Market tab.
The application landing page contains the following details:
- List of tokens supported by the AAVE market
- Total current market size
- Individual token market size
- Total borrowed amount of each token
- Deposit APY (Annual Percentage Yield)
- Variable borrow APY
- Stable borrow APY
To get more details about any token, just click on it.
To deposit any token, you are required to navigate to the Deposit tab. Select your desired token.
Users are required to deposit collateral before taking out a loan from any lending platform.
Enter the amount of tokens you want to deposit. It will go through a series of approvals.
You can now see the deposited amount on your dashboard.
To borrow, navigate to the borrow section.
The amount of a token to be borrowed depends upon:
- Collateral amount
- Liquidity of the asset
Users can borrow against the collateral that they have deposited. The application consists of a bar that shows your risk status when you enter the amount of tokens to be borrowed.
It is always recommended not to borrow the max amount to avoid liquidation.
Important: It is advised to maintain the health factor >1 to avoid liquidation.
To borrow any token, just click on the token available on the borrow pane and enter the amount of tokens you want to borrow.
The testnet, by default, selects the loan rate as a variable rate. After filling all the mandatory parameters, you can approve the transaction to process your request.
You can now see the borrowed amount on your dashboard.
Users can stake their AAVE tokens by depositing them in the protocol safety module. The safety module is a smart contract-based component where AAVE holders deposit their tokens and receive incentives. In case of a shortfall event, up to 30% of your stake can be slashed to cover the deficit. AAVE token holders can participate in the protocol governance.
Important: The testnet currently doesn’t support staking Balancer Pool Tokens (BPT). The project team is planning to include it later. We will update the guide again once it is introduced in the testnet.
Users can claim the rewards that they have earned from staking AAVE.
Users can unstake the tokens at any time. The testnet supports a cooldown period of 180 seconds. The cooldown period is the time required before unstaking the token.
To unstake, you first need to Activate Cooldown by pressing the button.
Important: The testnet supports a cooldown period of 180 seconds. After that, the Unstake button will appear and it will be visible only for 180 seconds. i.e., the tokens should be unstaked within 180 seconds, otherwise you have to activate the cooldown period again.
The staked amount becomes zero.
Users can repay the tokens that they have borrowed whenever they wish. Just enter the amount you want to repay and confirm the transaction.
You can check the Borrow dashboard changes after repaying.
If you have repaid all your loan, and no longer want to use the platform or merely want your collateral free for any other reason, you can proceed with withdrawing your collateral.
Just click on the Withdraw button and enter the amount of tokens you want to withdraw.
We have noticed that the platform is not allowing users to withdraw the entire amount of tokens at one go. However, if you want to withdraw more, you have to do a series of withdrawals to get the entire amount back.
After doing a couple of withdrawals, now the dashboard looks like this.
The withdrawal amount is deposited in your MetaMask wallet.
The AAVE governance portal consists of a list of the proposals upon which AAVE token or stkAAVE (Staked AAVE) token holders can vote.
The migration portal allows the users to migrate LEND tokens into AAVE tokens.
We couldn’t test the migration features as there is no LEND token in the testnet faucet. We have communicated this to the team and will update the guide again when the LEND token becomes available in the faucet.
The AAVE V2 testnet (UI) is running smoothly. All current platform features are giving expected results. The platform is currently tested only on the AAVE market. The code is currently under four audits, and formal verification and results will be published before the mainnet launch. It aims to resolve the gas cost issue, which is one of the biggest problems of crypto technology. This will help AAVE in attracting a huge fan base if it contributes towards gas issues. However, the actual scenario will be known after the mainnet actually launches. Seeing its previous growth chart, we are very hopeful that it will bring some major changes in the entire crypto, as well as the DeFi, industry with its mainnet launch.
Resources: AAVE Medium page
Read More: Ethereum 2.0 ETH Staking: This Is How!