AAVE Risk

AAVE (AAVE)

INTRODUCTION
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DESCRIPTION

AAVE is a decentralized lending protocol built on the Ethereum blockchain. It was launched in 2020 by Stani Kulechov as an evolution of the earlier lending platform known as ETHLend. AAVE allows users to lend, borrow, and earn interest on their cryptocurrency assets without the need for intermediaries. The protocol operates through a system of smart contracts that handle the lending and borrowing activities while ensuring transparency and security.
One of the key features of AAVE is the concept of "flash loans," which allows users to borrow funds without the need for collateral as long as the loan is repaid within the same transaction. This innovation has opened up new opportunities for arbitrage and capital optimization within the DeFi ecosystem. The AAVE token, also called AAVE, serves as the governance and utility token of the protocol, allowing holders to participate in decision-making and earn rewards.
AAVE has quickly become one of the leading lending protocols in the decentralized finance (DeFi) space. Its user-friendly interface, wide range of supported assets, and competitive interest rates have attracted both individual and institutional participants. AAVE's success has also led to the development of a vibrant ecosystem of third-party applications and integrations, further expanding its reach and functionality. As the DeFi sector continues to grow, AAVE is positioned to play a significant role in providing decentralized lending and borrowing services to users worldwide.

AAVE (AAVE) Whitepaper: https://github.com/aave/aave-protocol/blob/master/docs/Aave_Protocol_Whitepaper_v1_0.pdf
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RISKS OF AAVE

Any investment in cryptocurrency and digital assets, such as AAVE, can include the following general risks:(i) volatility risk and liquidity risk(ii) short history risk(iii) demand risk(iv) forking risk(v) code defect risk(vi) regulatory risk(vii) electronic trading risk(viii) cyber security riskFor additional information of risks associated with cryptocurrency and digital assets, you may refer to the Satstreet Inc Services Risk Statement. In terms of specific risks, as AAVE is one of the longest-standing crypto assets and its community base is widely decentralized, there is no central working group or authority to disclose material information to the public regarding AAVE. Please note that these risks and the associated summaries or overviews provided for each herein are not intended to be a complete overview of all such risks and, in addition, there may be other risks that come with exposure to AAVE. We encourage all users to perform their own due diligence to assess the risks associated with AAVE and to determine whether this level of risk is acceptable to them. Neither AAVE nor Satstreet guarantees the value of AAVE, and holders of AAVE will not have any recourse to AAVE or Satstreet if the value of AAVE declines for any reason whatsoever.

SATSTREET EVALUATION OF AAVE

Satstreet Inc. has reviewed and assessed AAVE prior to making it available through our services and has concluded that AAVE is not a security or derivative under Canadian securities legislation; however, there is a risk that this conclusion could change in the future and that, in such event, Satstreet will be required to halt, suspend, and then remove AAVE from its platform as described in the Satstreet Inc. Services Risk Statement.

Further, as indicated above, no Canadian securities regulatory authority has expressed an opinion about AAVE, including an opinion that AAVE is not itself a security and/or derivative. Based on publicly available information Satstreet has reviewed AAVE, including, but not limited to, a review of the following: The creation, governance, usage, and design of AAVE, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created AAVE. The supply, demand, maturity, utility, and liquidity of AAVE. Material technical risks associated with AAVE, including any code defects, security breaches and other threats concerning AAVE and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them. Legal and regulatory risks associated with AAVE, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of AAVE, and (ii) statements made by any securities regulatory authorities in Canada, other regulators in IOSCO-member jurisdictions, or the regulator with the most significant connection to AAVE about whether AAVE, or generally about whether the type of crypto asset, is a security and/or derivative.

Last Updated: June 2023

Risk Statements

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