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Aave vs US Dollar (AAVE/USD CFD)

Trading Conditions:

Axi Symbol: AAVEUSD

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3 Day Financing: Friday

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Pricing is indicative. Past performance is not a reliable indicator of future results. Client sentiment is provided for general information only, is historical in nature and is not intended to provide any form of trading or investment advice - it must not form the basis of your trading or investment decisions.

What is AAVE/USD?

The AAVE/USD trading pair represents the value of AAVE, the native cryptocurrency token of the same-named decentralised lending system, relative to the US dollar, or the number of US dollars required to acquire one AAVE.

The Aave platform focuses on crypto-based lending and borrowing. Its users may borrow and lend stablecoins, alternative cryptocurrencies, and other crypto assets. To automate these processes, it runs on the Ethereum blockchain and employs smart contracts (self-executing contracts with the terms of the agreement written directly in lines of code).

Aave specialises in overcollateralized loans, which require users to deposit cryptocurrency assets of greater value than the amount they wish to borrow. Aave sets Loan-to-Value (LTV) limits at 80% of the current value of pledged collateral to ensure stability. Aave operates liquidity pools, where users can deposit their crypto assets, which are then lent to borrowers, as opposed to directly matching lenders and borrowers. Borrowers on the Aave platform receive funds in the form of an aToken, a special token pegged to the value of another asset. These aTokens are created (minted) when a deposit is made and destroyed when redeemed.

Moreover, Aave's innovation extends to Flash Loans, a feature that enables loans to be repaid within the same block on the blockchain, enabling arbitrage opportunities in the cryptocurrency market.

AAVE/USD historical performance

The AAVE token, which was introduced in October 2020, experienced a meteoric rise to its all-time high (ATH) of $594 in May 2021. It was affected by price volatility in the year that followed and has been ranging between $50 and $110 since May 2022.

Over 91 percent of AAVE's maximum supply of 16 million tokens is in circulation.

What affects the price of AAVE/USD?

The overall macroeconomic environment as well as market sentiment, which is influenced by the news and social media, can affect the price of AAVE and other cryptocurrencies. For example, positive news and a general optimistic sentiment in the market can drive up the price of AAVE.

AAVE's performance is closely tied to trends within the decentralised finance (DeFi) ecosystem. If there is a significant increase in the adoption of DeFi protocols and applications, it can lead to higher demand for AAVE and potentially increase its price. Additionally, regulatory changes that affect the DeFi industry, such as new regulations on lending platforms or decentralised exchanges, can also have an impact on AAVE's price.

Aave has integrated and collaborates with several companies in the crypto space, notably Curve, 1inch, and Synthetix. These collaborations can have an impact on AAVE's price as they can lead to increased usage of Aave's protocol and attract more users to the platform. Additionally, updates or developments from these companies and their key figures can also generate positive sentiment and interest in AAVE, potentially driving up its price.

The overall trends and liquidity of the market can affect AAVE's price. For example, if there is a general bull market in cryptocurrencies where the prices of various digital assets are rising, AAVE may also experience an increase in price. On the other hand, during a bear market or a period of low liquidity, AAVE's price may decline.

Announcements of upgrades or advancements to the AAVE protocol can have an impact on its price. For instance, if AAVE introduces new features or improves its scalability, it can attract more users and increase the demand for AAVE tokens, potentially leading to a higher price. Similarly, if the AAVE protocol addresses any security vulnerabilities or enhances its governance mechanisms, it can generate positive sentiment and confidence in the platform, which can also positively impact the price of AAVE.

What to watch out for when trading AAVE/USD?

When trading AAVE/USD, traders must closely track data releases and statements from organisations and key figures that can influence laws and regulations, market sentiment, and the cryptocurrency market. These encompass:

  • Announcements pertaining to platform updates, new features, partnerships, and integrations from Aave's founder and CEO, Stani Kulechov, and other prominent figures in the cryptocurrency space.
  • Statements or actions by regulatory bodies, including the Securities and Exchange Commission (SEC) in the United States or the Markets in Crypto Assets (MiCA) regulation in Europe.
  • The listing of AAVE on major exchanges may increase its liquidity and trading volume, which could affect its price.
  • Opinions about AAVE on social media platforms, message boards, and news sources.
The data is sourced from third-party providers. This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.

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