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Aave

Theme

Aave

ProtocolTechnicalGovernance

Tokenomics

Distribution

The AAVE token distribution ensures allocation among key stakeholders to support the protocol. The specific details for distribution include:

  • Community: Allocation for initiatives that drive engagement and adoption.
  • Ecosystem Reserve: Tokens dedicated to supporting upgrades and ecosystem growth.
  • Treasury: Reserved for long-term protocol sustainability and governance.

Total Supply

The AAVE token has a fixed maximum supply, ensuring scarcity and value alignment within the Aave ecosystem.

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  • Maximum Supply: 16,000,000 AAVE tokens.
  • Circulating Supply: 15,049,449 AAVE Tokens
  • Token Swap: AAVE was launched as part of a token migration from the LEND token, with a conversion rate of 100 LEND to 1 AAVE.

Utility

The AAVE token is integral to the Aave ecosystem, providing multiple functionalities that enhance user experience and ensure protocol sustainability. The key use cases include:

1. Governance

AAVE holders play an active role in the governance of the Aave protocol through the voting system. By participating in governance:

  • Proposal Creation and Voting: Holders can propose and vote on Aave Improvement Proposals (AIPs), which define upgrades, changes, and developments within the protocol.
  • Decision-Making Authority: Governance spans areas such as asset listings, risk parameters, and resource allocations.

Users can also delegate their tokens to other addresses, which allows for proxy voting, making it easier to reach thresholds necessary to pass proposals.

2. Staking in the Safety Module

The Safety Module is a key mechanism for protocol security, supported by AAVE staking:

  • Insurance Against Shortfalls: Staked AAVE acts as a reserve to cover deficits during protocol emergencies or adverse events.
  • Rewards for Stakers: Users who stake AAVE tokens earn additional rewards, often in the form of protocol fees or additional AAVE tokens, incentivizing participation.

3. Collateral Usage

AAVE tokens can also serve as collateral within the protocol:

  • Borrowing Power: Users can deposit AAVE to borrow other assets, with the amount determined by the token’s loan-to-value (LTV) ratio.
  • Staking as Collateral: In some configurations, staked AAVE may also enhance borrowing capabilities.