Bittime -Want to know how to stakeAave (AAVE)? watch until the end, okay? Aave has become one of the leading DeFi (Decentralized Finance) protocols that allows users to borrow and lend crypto assets.
However, Aave not only offers easy access to liquidity, but also provides AAVE token holders the opportunity to actively participate in the ecosystem through staking.
AAVE: Core Token of Aave
AAVE is the native token of the Aave protocol. AAVE has several important functions on the platform, including:
Staking
Users can stake Aave (AAVE) into contracts to contribute to the security of the Aave protocol. Staking is done by storing AAVE tokens in a special module called the Safety Module.
The purpose of staking is to act as a mitigation tool in the event of a shortfall (lack of liquidity). In return for their contributions, stakers are incentivized in the form of various staking rewards, including the AAVE token itself.
Governance
Both AAVE and stkAAVE (Staked AAVE) can be used to vote on Aave governance proposals. The number of these two tokens will be combined to determine the strength of your voting vote.
However, it should be noted that you can move tokens as long as the number of tokens remaining in the wallet used for voting remains the same or higher than the tokens used for voting. This means reducing your token count to lower than the number of tokens used for voting will invalidate your vote.
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Getting to Know the Risks of Staking Aave (AAVE)
While Aave (AAVE) strives to make staking as safe and transparent as possible, it is important to consider the factors that may influence whether a particular staking option is suitable for you. Here are some risks to pay attention to:
Slashing risk (cutting risk)
A shortfall event in the Aave Protocol occurs when there is a deficit for liquidity providers. In the case of a shortfall, a portion of the staked AAVE will be auctioned on the market for sale to cover the resulting asset shortfall. In situations like this, the Safety Module can use up to 30% of staked AAVE tokens to cover the deficit. It should be noted that these percentages may change as the interpretation of shortfall events may be the subject of a governance vote.
Token issuance event (token issuance event)
If during the shortfall the number of tokens taken from the Safety Module is not enough to cover the entire debt, an ad-hoc Aave (AAVE) token issuance event called a Recovery Issuance will be triggered. These issued AAVE tokens are also used to cover the deficit, which has the potential to lower the token price significantly.
Unbonding risk (risk of staking cancellation)
The cooldown period for AAVE by default is 10 days. Crypto asset markets are highly volatile, and investors need to be aware that they cannot immediately sell their tokens after staking. They must wait 10 days for the token to become unbonded before it becomes liquid. It should be noted that the cooldown period can be further extended through a governance vote. Consider keeping funds liquid if you do not intend to hold AAVE long-term.
Protocol security risks
There is an inherent risk that the protocol may contain unknown bugs. These risks apply not only to staking but also to investing in Aave (AAVE).
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Steps to Stake Aave (AAVE)
There are several ways to profit from your Aave (AAVE), including lending it to a custodian provider or through a decentralized lending protocol, providing liquidity on the Aave protocol, or staking your tokens on the platform.
To stake Aave, you can follow these steps:
- Visit the Aave Staking Dashboard. You can find this dashboard on the official Aave website.
- Under 'Stake AAVE', select 'Stake', enter the amount you want to stake, and click 'Approve to continue' to confirm the transaction in your wallet.
- Once approved, click 'Staked' to complete the transaction in your wallet .
Huge Benefits of Staking Aave (AAVE)
All rewards are earned in real-time and distributed when AAVE is withdrawn or transferred from the Safety Module. Aave (AAVE) staking rewards consist of:
Token Inflation
The Aave protocol incentivizes stakers with Safety Incentives (SI) tokens. Currently, there are 1100 AAVE/day to be distributed among stakers. SI allocation must be selected by voting before the end of the 3-month distribution schedule. If a vote on the new allocation plan is not held or is late, the current allocation will continue until a vote is held or until the Aave Reserve (3 million) is exhausted. Remember that your token rewards depend on the results of quarterly voting.
Protocol Fees
Apart from Safety Incentives, stakers will also be able to get trading fees from the Aave protocol (AAVE). However, currently, stakers can only receive AAVE tokens in return. Any implementation of fee rewards will be subject to future governance changes.
It is important to remember that the total annual reward is shared among all active stakers. As the number of tokens staked increases, the reward rate will decrease. Additionally, there are governance proposals that could adjust some on-chain parameters, which could also change the APR (Annual Percentage Rate) if approved.
You can use the Aave-provided Staking Calculator (AAVE) to get a better understanding of how these factors can impact your rewards.
Conclusion
Aave staking offers an exciting opportunity for AAVE token holders to contribute to the security and sustainability of the Aave protocol. By participating in staking, stakers not only help maintain the financial health of the protocol, but can also earn rewards in the form of additional AAVE tokens.
However, before deciding to stake, it is important to understand the associated risks, such as slashing risk, token issuance event, unbonding risk, and protocol security risk.
Additionally, it is worth considering factors such as your investment horizon and the volatility of the crypto market in general. If you intend to hold AAVE long-term and are comfortable with a 10-day cooldown period, then staking Aave (AAVE) could be an attractive option.
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How to Buy Aave (AAVE) on Bittime
You can buy and sell Aave (AAVE) in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Aave (AAVE) is available on Bittime with the market pair AAVE/IDR . To be able to buy AAVE/IDR on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Aave (AAVE) on Bittime.
Monitor the price chart movements of Aave (AAVE), Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
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DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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