Lend Coin is a type of cryptocurrency associated with decentralized finance (DeFi) platforms, particularly in the context of lending and borrowing services. It is designed to facilitate peer-to-peer lending without the need for traditional financial intermediaries like banks.
Users can lend their crypto assets to others and earn interest, or borrow funds by providing collateral. The specific features and functionality of Lend Coin can vary depending on the platform it is used on and the underlying smart contract protocols.
ETHLend, as the name indicates, is a peer-to-peer network built on the Ethereum blockchain that is intended to serve as a lending platform. The main goal of the project’s CEO and founder, Stani Kulechov, was to establish a safe and transparent environment in which borrowers may use their digital assets as security for loans in a highly protected and decentralized process.
Since the Ethereum blockchain is an open-source platform on top of which developers can easily create new dApps, the ETHLend platform architects took advantage of this characteristic when creating their own currency. This lending platform, in particular, includes a native coin known as LEND, which has a wide range of applications.
But, what are the underlying mechanisms of this blockchain platform, and how does the lending and borrowing of cryptocurrencies function? We’re here to provide the answers to these questions and more for you, so read on.
How Does the ETHLand Blockchain Platform Function?
The ETHLend blockchain peer-to-peer DeFi platform gives customers the ability to borrow ETH by securing their tokens with LEND, an ERC20 Ethereum-based token.
Some loan trading on this blockchain platform is carried out through the use of decentralized exchanges (DEXs), which allow peer-to-peer transactions to be carried out without the involvement of a middleman. In turn, this provides greater transaction data privacy. Also, ETHLend allows customers to use Ethereum Domain Names (EDN – a decentralized Ethereum-based naming system) as security for loans rather than digital assets.
Furthermore, the ETHLend blockchain makes use of smart contracts as another way to eliminate the need for a third party in the transaction process, therefore maintaining the decentralized nature of the platform.
In order to ensure secure and transparent processes of lending and borrowing decentralized finances (DeFi) on the platform, the ETHLend cryptocurrency project incorporates a special protocol, nowadays known as the Aave protocol.
What Is Aave (AAVE)?
Aave is a decentralized open-source DeFi lending protocol, which originally carried the name the ETHLand. The Aave-powered lending platform, which is built on the Ethereum blockchain, supports a variety of cryptocurrencies.
All of the digital assets (stablecoins, tokens, and altcoins) stored on the platform may be borrowed by users in exchange for variable interest rates.
Users can also lend a cryptocurrency of their choice to liquidity pools and earn from the interest paid on the deposited crypto assets. A portion of Aave’s liquidity pools is allocated to mitigating any fluctuations caused by the volatility of cryptocurrencies. Lenders have the option of retrieving their assets at their own convenience.
Moreover, the users of the ETHLend (Aave) lending platform have full ownership rights over the digital assets stored in their digital wallets, which is in compliance with the spirit of decentralization in the cryptocurrency ecosystem.
When users deposit resources that they intend to lend, the fund of digital assets is subsequently gathered and deposited into a lending pool. From here, the users who plan on borrowing digital currencies from those funds will then have the option of drawing a specific amount straight from the pools when they submit an application for a loan.
In order to provide more functional lending and borrowing processes for its users, the Aave platform makes use of two types of tokens. One of them is its native AAVE token, and the other one is the aToken, which is issued to the lenders as a means for collecting the accumulated interest on the deposited funds.
AAVE is the basic token of the Aave lending protocol, and it can be used to give or take loans. Prior to the rebranding of the ETHLend platform in 2018, this token went by the ticker symbol LEND. The LEND token was finally phased out in favor of AAVE in 2020.
Aave’s interest-bearing tokens are known as aTokens. These tokens have the same value as the cryptocurrency coin that was deposited (calculated at a 1:1 ratio) and can be exchanged or transferred at the discretion of the lender. When cryptocurrencies are deposited and redeemed on the Aave platform, aTokens are created and then burned in the process.
On the other hand, the interest accrued by the aTokens deposits is made available to aTokens holders by growing the amount of cryptocurrencies in their digital wallets on a regular basis.
How to Lend Cryptocurrencies on Aave
In order to make a deposit for a certain interest rate on Aave, you need a web 3.0 Ethereum digital wallet, such as Metamask or Formatic. Also, you need to register an account on a cryptocurrency exchange.
Depositing a cryptocurrency is a pretty simple process that involves just clicking on the ‘Deposit’ button. You can easily find it next to the digital coin or token of your choosing on the cryptocurrency exchange.
After you complete the transaction, your Aave interest-bearing tokens will be deposited in your cryptocurrency wallet, where they will commence accumulating interest.
How to Borrow Cryptocurrencies on Aave
Similar to the process of making a deposit, you can easily borrow from Aave’s cryptocurrency pooled resources. Prior to submitting a borrowing request, you must put in a deposit which will be used as security for the borrowed amount of cryptocurrencies. Also, a web 3.0 digital wallet is required to receive the borrowed sum.
After this, navigate to Aave’s home page and locate the cryptocurrency of your choice. Next to it, you’ll find the ‘Borrow’ button. A simple click on it will instruct you to link your web 3.0 digital wallet to the crypto lending platform.
You will be asked to select both the quantity of cryptocurrency you desire to borrow as well as the sort of interest rate you intend to pay from this point forward. Namely, when borrowing from Aave’s liquidity pools, you have the option of paying either a constant or variable interest rate on your loan.
Users of the platform can also apply for instant loans, which are commonly referred to as flash loans. In the case of instant (flash) loans, users can borrow a certain amount of the pooled cryptocurrencies without submitting security for that amount. These funds are guaranteed by a mechanism of the Aave platform that reverses the transactions if the borrowed amount is not returned in due time.
Which Cryptocurrencies Are Supported by the Aave Lending Platform?
The Aave platform supports 19 cryptocurrencies. The exhaustive list of the tokens and coins supported by this blockchain-based lending platform includes: USD Coin (USDC), Ethereum (ETH), Binance USD (BUSD), Enjin Coin (ENJ), TrueUSD (TUSD), USDT Coin (USDT), sUSD, DAI, Ox Coin (ZRX), ChainLink (LINK), Decentraland (MANA), Augur (REP), Kyber Network (KNC), Maker (MKR), SNK, Yearn.finance (YFI) REN, WBTC Coin (WBTC), as well as Basic Attention Token (BAT).
Where and How Can You Buy a LEND (AAVE) Token?
When ETHLend launched its initial coin offering (ICO) in November 2017, it raised a total of $16.2 million USD. There is a total supply of 16 million AAVE tokens, and about 1.3 billion AAVE tokens are in circulating supply, which is proportional to the entire value stored on the Aave lending platform.
Crypto exchanges such as Binance, OKEx, Uniswap, or CoinDCX are among the most popular online platforms where you can purchase, sell or trade LEND (AAVE) tokens. The trending trading pairs for this token include ETH-LEND, USDT-LEND, XRP-LEND, and DAI-LEND.
It’s important to note that not all exchanges have the same trading regulations. Thus, most of them only allow trading with cryptocurrencies, which means you can’t directly buy coins or tokens in fiat currencies like GBP, EUR, AUD, or USD.
You first must deposit some Bitcoin (BTC), Ether (ETH), or other digital currency on your account in order to purchase the coin or token of your choice. After making the deposit, you can swap ETH or BTC for LEND coins.
A Few Words Before You Go…
Cryptocurrency loans are made possible through the ETHLend blockchain-based DeFi platform, which allows users to borrow ETH and other altcoins by securing their tokens with LEND, i.e. AAVE token. Similarly, with the Ethereum platform, the ETHLand platform utilizes the self-executing smart contracts in order to maintain the decentralized character and eliminate the need for a central authority or a third party as support for the lending operations.
When the ETHLand (Aave) platform users deposit resources that they plan to lend, the corpus of digital assets is collected and placed into a lending pool from which other users may borrow the required quantity of digital money. The processes of lending and borrowing crypto coins or tokens on this platform are relatively straightforward – even a newbie in the crypto realm could say that the ETHLand (Aave) platform is a user-friendly one.
The Aave platform employs two types of tokens: aTokens and its native AAVE token. Both of these tokens facilitate more functional lending and borrowing procedures for the platform’s users. At the same time, the tokens support the decentralized character of the ETHLend (Aave) platform, which is the first of its kind (and one of the best) in the DeFi realm of the crypto ecosystem.