Manage episode 289438508 series 1435652
In decentralized finance (DeFi) a liquidity pool is a collection of cryptocurrency funds created from the deposits of many users and usually multiple different currencies. There are 2 main types of pools: custodial and non-custodial. Custodial pools are controlled by a third party manager which contains information like the private keys and the funds. They are most commonly web-based. Non-custodial pools mean that each contributor has complete control of their private keys (their funds) and are often browser based or keys can be stored and funds traded using hardware devices.
AAVE is a trusted, open-source, and non-custodial liquidity protocol on Ethereum. Participants use AAVE to either deposit or borrow funds. Depositors earn interest on their funds in the same currency they deposited: USD-USD, DAI-DAI, etc. When demand is high for the deposited currency, the earned interest increases automatically. Borrowers deposit collateral and then borrow from any currency in the protocol. Their entire platform, from their APIs to smart contracts, are open-source and reviewable by anyone. This has been the basis for many platform audits, providing high reliability to users and enabling integration into other services and products.
In this episode we talk with Ernesto Boado, a full stack and blockchain developer currently co-leading the development of the AAVE protocol. We discuss decentralized finance, token economics, and how AAVE aTokens make their service unique.
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