AAVE in Crypto IRA / 401k Retirement Accounts

July 7, 2021

AAVE, the largest Decentralized Finance (DeFi) protocol in the world is now available in Crypto IRA / 401k Retirement Accounts.

What is AAVE?

Founded in Nov 2017 and previously known as ETHLend, Aave was founded by Stani Kulechov. It’s one of the DeFi primitives and a building block of the new decentralized smart contracts based financial system. It relates to the automated non-custodial lending / borrowing aspect and is firmly integrated with most other protocols. 

Aave is a Finnish word meaning “ghost”. As such it alludes to the open and transparent nature of the protocol. There are around 20 cryptocurrencies available on the platform (including ETH, DAI, UNI, USDC, MATIC etc.), which lenders can supply to earn compounding interest and receive A-marked tokens (aETH, aUSDC etc.), which generates yield over time. 

The lenders also receive a percentage of the flash loan fees, which are zero collateralization loans, which need to be repaid in one block. Then, there are borrowers, mortgaging assets, to receive loans for different purposes. They pay interest over time, which is paid to the lenders and the interest rate varies by supply / demand. 

There are collateralization ratios, liquidation thresholds and liquidation penalty parameters. Aave doesn’t have any vesting period and the withdrawals can be made at any time. A new version of the protocol, specifically designed for institutional entities and the corporate world is due to launch soon. It will feature permissioned KYC’ed access to special liquidity pools, anti-fraud / money laundering protection by Fireblocks, existing separate from public pools while still benefiting it. 

What makes AAVE so unique?

Aave is essentially a decentralized bank, offering the lending / borrowing facility and creating a credit market, on top of blockchain. It’s salient feature is that you don’t have to fulfill paperwork or pass extensive KYC, before starting to use it. Further, it’s non custodial and assets are managed through self-executing complex logic instruments – smart contracts.

This means that there’s no possible way to censor any financial activity on Aave nor can someone defraud the lenders/borrowers. It’s more transparent and open than a traditional financial institution and can be independently audited to prove adherence to protocol rules and/or verification of assets. 

What gives AAVE the token value?

AAVE, previously LEND, is the native token of the Aave protocol. It’s used for governance (voting on proposals), incentives and mitigation tools. The token holders can vote on proposals for matters of governance and protocol upgrades. 

The long term value proposition of AAVE is the ability for token holders to vote in cash flows, which will potentially provide a steady stream of cash flows to holders.

AAVE in Retirement Accounts

Investors who believe in the long term of AAVE and Decentralized Finance may want to seriously consider purchasing the asset within their retirement accounts. This will not only provide them tremendous tax savings, but will allow them to know they are positioning their investments towards the future of finance.

AAVE is now available for investing within qualified IRA / 401k retirement accounts at iTrustCapital