You can now earn interest with Aave in Argent's zkSync wallet. By using Aave on zkSync you can save up to 100X on fees compared to Ethereum Layer 1. You can also access it in just a tap or two. Here are the details.
What is Aave?
Aave is a Decentralized Finance (DeFi) marketplace with over $20bn in total value locked that lets people lend and borrow crypto assets, without needing to use a centralized intermediary like a bank or exchange.
Lenders earn interest by depositing assets with Aave's pools. The interest is variable - meaning it can go up or down - and paid by borrowers.
Argent's Aave integration on zkSync simply allows you to earn interest by depositing assets, not borrowing.
How to lend your crypto with Argent and Aave
Lending your crypto with Aave (currently only stablecoins USDC and DAI) to earn interest on in the Argent zkSync account is as easy as:
- Tap ‘Invest’
- Tap USDC or DAI within ‘Earn on tokens you hold’
- Select ‘Lend’
- Enter the amount you want to lend
- Tap ‘Review’
- Tap ‘Invest now’
You’ll then receive either aUSDC or aDAI based on the token you selected, representing the amount you have invested.
Fees
Aave charges no fees to lenders.
As we are using pooling to bring liquidity from L1 to L2, you pay a small gas fee to cover your share of the L1 transaction needed to rebalance the pool.
There are also zkSync network fees which will cost no more than a couple of dollars.
Further information
Risks
As always in crypto and DeFi, you should do your own research before using a product. These include smart contract vulnerabilities and the economics of the protocols involved. Aave’s audits can be found here.
Calculating APY
As soon as you deposit you will start earning interest. This interest compounds every Ethereum block - about 10 seconds. The interest rate is variable, meaning that it will fluctuate based on borrowers’ demand for the crypto assets. If there is a high demand, then the rate goes up, and if there is low demand, it declines. Read more about this in Aave’s docs.
With zkSync 1.0 you can't have a rebasing token (a token where your balance increases over time), as this balance increase happens on L1, handled by the token contract. So, on L2, your investment balance will remain the same but the value increases in your chosen currency, like dollars.
How Aave access works via Argent on zkSync
ZkSync is just getting started and smart contracts are coming with version 2.0 in 2022 - until then, we’ve partnered with leading DeFi providers to bring a selection of popular investment options and utilize atomic swaps on zkSync - a trustless, peer-to-peer way to swap tokens between two parties.
Disclaimer: This blog post is for informational purposes and is not financial advice. Investing in cryptocurrencies and DeFi involves risk and can result in you losing money.
Further reading
- Aave FAQs
- Aave borrowing - explains more about interest rates
- Lending And Borrowing In DeFi Explained by Finematics
- What is zkSync
