Quick summary: Our recommendation is to use eToro to short Aave. They have the most popular cryptocurrencies on offer, great support, and have an easy system for shorting cryptocurrencies in general.
While there are a lot of options out there for buying AAVE, shorting is a different story. Luckily for us here in Australia, we do have a few crypto brokers and exchanges that allow for CFDs and shorting.
One of those brokers is eToro, which we’ll be using for this guide. Let’s get started!
How to Short Aave in Australia
A quick recap first on what shorting actually is: The main objective of shorting or short selling is to make a profit (of course). The idea is to sell a stock/cryptocurrency hoping it will drop in value so you can buy it back later for cheaper, thus creating a net profit.
Shorting Aave can be done in 4 easy steps:
1. Choose 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 broker to follow along, they all work very similarly.
2. Create an account on the crypto trading platform
Let’s start with just signing up with eToro.
The sign-up process is very easy, as is the verification that needs to be completed afterwards so you can get started.
3. Funding your account
Next is funding your account. You have several options when it comes to depositing AUD into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.
4. Short Aave
Now for the actual shorting:
- Starting off at the search bar at the top, find Aave by entering the name or symbol.
- Then 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 sell the stock.
- 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.
Affiliate Disclosure: This site is supported by its users. We may receive commissions for purchases made through the links on our site. This does not impact our reviews, guides or comparisons.
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 complex compared to eToro, they do have more cryptocurrencies on offer.
Frequently Asked Questions
Can I short Aave on Binance?
Yes, you can short Aave on Binance. They have over 300 cryptocurrencies on offer and specialise in the crypto market. They also have a great app and competitive fees.
Aave was once known as ETHLend. It was founded by Stani Kunechov in November 2017. The company raised $16.2million through an ICO round. ETHLend was later rebranded to Aave as Aave on September 2018.
Aave (AAVE), the native token of Aave, was launched in October 2020 to help Aave become self-governed. After the token's launch a 1:100 token transfer must be made to the new token.
Aave has currently partnered with and integrated 30 companies, such as Curve, 1inch, Synthetix, and Synthetix.
Fun fact: Aave in Finnish means "ghost" and is used to describe the protocol's objective to provide transparent and open infrastructure to DeFi.
Aave users have access to the lending and borrowing functions for 20 supported cryptocurrencies like Uni (UNI), Dai(DAI), Yearn.Finance, and Yearn.Finance.
Lenders can earn an interest by creating liquidity in the market. By providing liquidity, there will be two sources for earnings: (1) the interest rate charged on loans and (2) a percentage charge for flash loans.
Borrowers have the option of choosing whether the rate on the loan is fixed or variable.
The latest v2 release allows users to protect themselves from liquidation by replacing their collateral with another asset.
Aave's unique product is a flash loan, which allows borrowers to get a loan with no collateralization. The borrower is responsible for repaying the loan as well as any additional interest and fees.
AAVE can also be used to vote on the upgrade of protocol via Aave Improvement Proposals.
You can stake AAVE within the protocol and you can also earn the protocol's staking fees and rewards. There are two options for how to stake: (1) You can stake AAVE and receive rewards in AAVE. (2) You can stake Balancer Pool Tokens (BPT), and earn AAVE, AAL, and trading fees through Balancer.
In the event that there are associated shortfalls, AAVE will serve as insurance to cover them.
When Aave protocol's liquidity providers are in deficit, your staked asset will be reduced up to 30%.