The Steemit Crypto Academy Week 4: Task @gbenga - The Full Explanation of a Project Built on Ethereum Blockchain//

INTRODUCTION
One notable reason for Ethereum Blockchain's fast growth must be in its open-arm embrace of users freedom to creating projects on the blockchain space. Though several projects in their hundreds have been built on the Ethereum Blockchain, I am privileged to discuss in full only one project. The project is AAVE formerly known and called ETHLend.

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AAVE is an open source, decentralized financial project launched in 2017 with the objective of lending cryptocurrencies with a guarantee with a simple mechanism which is "create a decentralized loan market". Its objective was to offer loans with all forms crypto-assets as collateral but recently, precisely in December 2020 AAVE rolled out a new whitepaper depicting an evolution from being a loan market to becoming a liquidity market where prices are considered according to demand and supply of crypto assets.

In simple terms, AAVE operates on two basics:

• creates liquidity by pooling funds together
• offer loans on interest with collateral of various forms of cryptocurrency.

This operation benefits all users since there're those who wants money for investments and those who to lend out their money on interest. So any who to provide liquidity would only need to invest his money in the platform with a view to receiving benefits when such money is borrowed and return afterward.

AAVE operates same way a bank mortgage is executed whereby you stake your asset say a house, to the bank who gives it value and then lend you the required amount payable at a certain future date. At the return of the said loan, the bank releases back the ownership of your asset. But collateral in AAVE platform are cryptocurrencies, this makes the platform very attractive to users who are interested to pool their funds in AAVE. Examples cryptocurrencies supported by AAVE and the liquidity pool are seen below:

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How are liquidity pools secured in AAVE?
Since volatility often occurs, there are about five (5) internal controls or safeguards installed within AAVE to liquidity providers, namely: Safety Module; Auction Module; Ecosystem; Oracle; One Backstop Module. With these modules, investors or injectors of tokens are protected in times of backdrop of cryptocurrencies.

Another interesting innovation of AAVE is its creation of space for Uniswap pools with the intent of allowing users to stake as collateral for borrowing their crypto-assets in Uniswap. This is in fact called flexibility of policy as it allows interactions between AAVE liquidity pool and Uniswap Liquidity pool.

Worthy of mention is the existence of AAVE former token called LEND and the new token called AAVE token. But since the evolution of AAVE, its token price has seen price hype from the former LEND token. Hence the users are allow to convert their old token to current AAVE token in a ration of 100 Lend to 1Aave token. That is improvement indeed and called AAVENOMICS.

The Architectural Pattern of AAVE
The picture below explains the many benefits AAVE users enjoy.

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The new feature makes room for Flash Loan within AAVE liquidity pools. How is this possible? The diagram below also explains how:

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AAVE innovations make it possible for instant loans because of reliance on pool liquidity instead of matching loans to each other. Flash loan here creates a number of financial trading possibilities such as a user trading with his collateral, using his collateral to repay a debt; trading with marginal profits and swaping debt - meaning that one exchange a debt with another debt.

Merits of AAVE

• Simplicity to users
• A good interest rates to users
• Decentralized governance protocol
• Users permission to withdraw fund directly with ETH even when other cryptocurrencies are involved
• Security of liquidity providers' pool fund, etc

Demerits
Here are two negative imparts AAVE protocols have on users particularly investors:

• Low interest rate.. this does not actually favour cryptocurrency farmers because investors obejective is usually high profit arising from lending.
• Flash loans pose a high threat AAVE protocols

CONCLUSION
With the above explanations, one can deduce that the ability of Ethereum Blockchain in creating space for individual projects is a welcomed development leading to Ethereum Blockchain's popularity. AAVE being a most innovative project built on Ethereum Blockchain is thriving from one positive stage to another.

I sincerely thank you my crypto prof @gbenga for your indept knowledge and lectures so far. I hereby invite @trafalgar to appraise this task and do the needful. I highly esteemed @steemitblog for this opportunity. My special thanks goes @bright-obias and @whitestallion for us proud @steemalive.

My Warmest regards to fellow students @cryptoacademy