How to Buy Aave (AAVE): Step-by-Step Guide and Token Risks
Aave is one of the largest lending protocols in DeFi, and AAVE is its governance token. Here's how it works, what makes the token risky and how to buy it without mistakes.
What Is Aave
Aave is a smart contract protocol where you can lend crypto for interest or borrow it against collateral. There's no bank: the terms are set by code and liquidity pools. The project started out as ETHLend and later changed its name.
Loans here are always overcollateralized: to borrow $100 in stablecoins, you have to put up more than that. If the collateral loses value, the borrower's position is liquidated automatically.
The AAVE token gives you the right to vote on protocol changes. You can stake it in the Safety Module, but then part of your coins may be used to cover the protocol's losses. For the basics, see DeFi explained simply.
AAVE Risks
- Smart contract risk. A bug in the code or a hack can lead to losses.
- Token price ≠ protocol success. Aave can grow in loan volume while AAVE falls.
- Staking has a catch. Coins in the Safety Module can be partially slashed if there's a shortfall.
- Regulators and competitors. DeFi rules keep changing, and there are many lending protocols.
How to Buy Aave (AAVE) Step by Step
Step 1. Choose a major exchange that lists the AAVE/USDT pair, and sign up. The whole process is covered in how to open a crypto exchange account.
Step 2. Complete KYC verification, then turn on 2FA and an anti-phishing code. Details: how to secure your exchange account.
Step 3. Get USDT into your account. The easiest way is to buy it from another person, as explained in how to fund your account via P2P. Why you need this stablecoin in the first place: what is USDT.
Step 4. Open the spot market, find AAVE/USDT and place a limit order at your price. How it differs from a market order: limit vs. market orders.
Step 5. If this is a trade rather than a buy-and-hold for years, set a stop-loss right away. If you'd rather not look for the levels yourself, check out Aspiro Trade: it has signals on 45 assets, each with an entry point, take-profit and stop-loss. You can see exactly which assets are on the list in the app.
Step 6. AAVE is an ERC-20 token. To store it, withdraw it to an Ethereum wallet on the Ethereum network (or another network if both the exchange and the wallet support it), and keep a little ETH for fees.
Where to Keep AAVE After You Buy
| Where | Pros | Cons |
|---|---|---|
| Exchange | You can sell in seconds, and stop-losses work | The exchange controls the keys |
| An Ethereum-compatible wallet | Your coins are under your control, and you can use the network's apps | Lose the seed phrase and you lose access |
| Hardware wallet | The most secure option for large amounts | Costs money and must support the right network |
Our partner link. If you decide to open an OKX account, please sign up through it: it's free for you and doesn't change any of the terms. If you trade, the exchange pays Aspiro a partner bonus, which goes toward developing our apps and the free Academy. We have no access to your account, your money or your trades.
- AAVE is bought on the spot market for USDT with a limit order.
- KYC and 2FA first, then deposit.
- A stop-loss is mandatory when trading.
Frequently Asked Questions
Do I need AAVE to use the Aave protocol?
No. You can lend and borrow without the token. AAVE is needed for voting and for staking in the Safety Module.
Is this the same as a bank deposit?
No. There is no deposit insurance, and your funds depend on how the smart contracts work and on the price of the collateral.
Where can a beginner buy AAVE?
The easiest way is on a major centralized exchange in the AAVE/USDT pair, using a limit order on the spot market.
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