Summary: Shorting Aave is pretty straightforward, all you need is a cryptocurrency exchange that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.
We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.
Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.
It might sound a bit complex but don’t worry, it’s a lot easier than you might think.
How to Short Aave
Shorting Aave can be done in 4 steps:
- Find a cryptocurrency trading platform
- Sign up with the exchange
- Fund your account with fiat or crypto
- Short Aave
1. Find a cryptocurrency trading platform
As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.
You can, of course, use any other crypto exchange that allows for short selling.
2. Sign up with the crypto exchange
Let’s start with creating an account on eToro.
The sign-up process is very quick and easy, as is the verification that needs to be completed afterwards so you can get started.
3. Funding your eToro account
Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.
4. Short Aave
These are the steps to follow to execute a short sell:
- Go to the search bar at the top, find Aave by entering the name.
- On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
- At the top of the trading interface: Click on sell to short the crypto.
- Enter the amount for which you want to sell Aave and click on “Open Trade”.
Once you’re ready to close the trade, hopefully when the value of Aave has dropped, go to your Portfolio, find the Aave trade, and click on the red cross to close the trade.
If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.
Congratulations, now you know how to short Aave!
Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.
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Where to Short Aave (AAVE)
Aside from eToro, the other major exchange you can use is Binance.
While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.
Frequently Asked Questions
Can I short Aave on Binance?
Yes, you can short Aave on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.
Aave, which was previously known by ETHLend was founded November 2017 and was launched by Stani Kolechov. Through an ICO round, it raised $16.2 Million. ETHLend, which was founded in November 2017, was rebranded to Aave by Stani Kulechov in September 2018.
Aave (AAVE), its native token, was launched by Aave in October 2020 as part of Aave’s initiative to become self-governed. The token's release requires that a 1:100 migration be made from the existing token.
Aave is currently working with 30 companies to integrate, partner, or collaborate.
Fun fact: Aave can be translated from Finnish to mean "ghost", which is an illustration of DeFi's goal to have a transparent and open infrastructure.
Aave platform users can use the lending and borrowing functionality of 20 supported cryptocurrencies including Uni (UNI), Dai, Dai (DAI), Yearn.Finance. (YFI).
By providing liquidity to the market, lenders can earn interest. Liquidity can generate two types of earnings: (1) interest on loans, and (2) a percentage in flash loan fees.
Borrowers may choose to have their loan on either a fixed or variable interest rate.
Users can use the latest version of v2 to avoid liquidation by swapping out their collateral for another asset.
Aave's primary product is a "flash Loan", where borrowers can get the loan with no collateralization. The borrower must repay the loan plus any additional interest. Fees are also due within the transaction.
AAVE can now be used to vote for and decide the protocol's upgradation via Aave Improvement Proposals.
Users can stake AAVE within this protocol. They can also receive the protocol's fees and staking rewards. Two ways to stake are (1) AAVE Stake and earn rewards in AAVE. Or (2) Stake Balancer Pool Tokens(BPT) and earn AAVEs, BAL, trading fees, and AAVE from Balancer.
The AAVE staked will be used as insurance in the event of any shortfalls.
Your staked assets can be reduced by as much as 30% if Aave protocol has a deficit status for the liquidity providers.