Now you can get DeFi loans in a flash with Aave and Chainlink
No-collateral
loan provider Aave has launched on Ethereum with a heap of innovative new
features, including a decentralized oracle network.
By Adriana Hamacher
From :: https://decrypt.co/16374/now-you-can-get-defi-loans-in-a-flash-with-aave-and-chainlink
Launched Wednesday on the Ethereum mainet, no-collateral loan platform Aave Protocol offers support for 16 digital assets, and is now integrated with oracle-provider Chainlink.
The UK-based company offers “flash loans,” in which funds can
instantly be borrowed with no requirement for collateral. The process takes
place in a single transaction, and has one condition: that the liquidity is
returned to the pool before the transaction ends.
If the user defaults on the loan, the transaction is reversed to
effectively undo the actions executed until that point, guaranteeing the safety
of the funds in the reserve pool.
Rate-switching and stable
rate loans
Aave—the name is Finnish for “ghost”—defines itself by its
evolving and imaginative technology.
Deposits are tokenized as aTokens which accrue interest in real
time. Instead of being defined by an exchange rate like cDAI/Chai or other
interest-bearing tokens available on the market, they are pegged 1:1 to the
value of the underlying assets.
Other features include: “rate-switching,” allowing users to
switch between stable and variable rates; “stable rate loans," which
behave as a fixed rate loan, but can be re-balanced to respond to severe
changes in market conditions, and “perpetual loans” which throw away payment
schedules and let users set their own duration.
When borrowing, the fee is 0.025 percent of the loan amount, but
for flash loans, it rises to 0.35 percent (which is split 70% for the lenders
and 30% for the protocol,) according to Aave.
The startup points out that its features are targeted at those
with some technical knowledge.
The future of DeFi—and
governance
Holders of LINK, Chainlink’s token, can also use their token as collateral in the Aave Protocol, capitalizing on its recent uptrend.
The Chainlink collaboration makes Aave the first lending protocol
to use off-chain data for calculating lending rates via a decentralized oracle
network. And Aave plans to gradually phase in complete decentralization.
“We see the
future of DeFi [Decentralized Finance] as strictly connected to the ability to
bring interchain communication and real-life assets to Ethereum, and this is
the direction we want to head with our collaboration with Chainlink,” said
Emilio Frangella, Software Engineer at Aave, in a post announcing the launch.
“The next step for Aave is to add governance smart contracts and transfer the ownership of the protocol to the community,” Aave CEO Stani Kulechov told Decrypt. He explained that Aave’s LEND token would be used to propose and vote on changes.
“The next step for Aave is to add governance smart contracts and transfer the ownership of the protocol to the community,” Aave CEO Stani Kulechov told Decrypt. He explained that Aave’s LEND token would be used to propose and vote on changes.
DeFi Pulse, which tracks growth in the DeFi sector, reports
growth of 130% over the last 12 months, with $700 million now locked up in DeFi applications.
Labels: #aave
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