How to Stake AAVE in 2024

Every crypto investor wants to maximize the amount of coins and tokens they have. Well, one of the better ways you can do just that is through staking. Specifically, staking your AAVE coin.

With staking, you can keep your crypto growing like a passive investment, a kind of fund that grows over time and improves steadily. In the guide below we will dive into exactly what that means, how staking works, its benefits, and the best place to stake AAVE coin in 2024.

Top AAVE Staking Platforms

What is AAVE Staking?

AAVE staking refers to processes whereby AAVE tokens are deposited to a particular wallet or platform to earn interest. In the crypto space, the term “staking” is sometimes used to refer to different processes of earning interest for putting coins at stake. Let’s start with what staking means in general, before moving on to the specifics of what staking entails for AAVE.

How to Stake AAVE

As with most stakeable cryptocurrencies, there are different ways you can stake AAVE. However, these approaches do vary in terms of both difficulty and technical expertise. Furthermore, for AAVE specifically, there are some additional things you will need to keep in mind.

Staking AAVE on a centralized exchange – Easy

Staking AAVE on a centralized exchange (CEX) involves locking up your AAVE tokens within your exchange account to earn rewards through lending. The exchange manages the technical complexities, making the staking process user-friendly and hassle-free.

It’s this “middleman” approach that is the greatest benefit of a CEX (and its greatest drawback). It is also what makes using them so easy.

Namely, CEX platforms offer intuitive interfaces that guide you through the staking process step-by-step, regardless of your technical expertise. You won’t need to set up or maintain nodes, wallets, or software, unlike self-staking methods.

Staking AAVE is seamlessly integrated into your exchange account, requiring minimal effort on your part. Most CEX platforms also automate the process of distributing rewards, ensuring you receive your AAVE rewards without manual intervention.

Besides the ease of use, staking AAVE on a CEX offers several attractive benefits:

• Accessibility – Anyone with an account on the exchange can easily participate in AAVE staking, making it inclusive for a wide range of users.

• Low Entry Barrier – You can start staking AAVE with a relatively modest amount, allowing more users to participate.

• Simplicity – The process of staking AAVE on a CEX is straightforward, making it suitable for those seeking exposure to staking without complex technical requirements.

• Consistent Rewards – CEX platforms handle the distribution of staking rewards promptly, ensuring you receive your AAVE rewards on a regular basis.

• Portfolio Management – Staking AAVE on a CEX streamlines portfolio management, as you can manage both staking and other trading activities within the same platform.

• Reduced Risk – Reputable CEX platforms typically have established security measures and a history of reliability, mitigating certain risks associated with self-staking methods.

We will cover actually using a CEX in the section below.

Staking AAVE through the AAVE App (and Safety Module) – Intermediate

The second way you can stake your AAVE is through their official app. The process is relatively simple, but you do need to know how to set up a private wallet and transfer tokens. You have to navigate to the Aave app, connect your chosen wallet with said app, and fill it up with AAVE tokens.

Then, move to the staking section, and input the amount of AAVE you want to stake. Then you will have to click on approval, and finally, you get to stake your AAVE.

Staking through the AAVE app automatically means you are staking through their safety module.

The issue here, however, is that in case of a shortfall event, you might lose up to 30% of your stake, in order to cover the deficit created by said shortfall event.

Shortfall events include a bug or potential attack that affects the smart contract layer of the network, the failure of an asset being used as collateral on AAVE, or a failure of their Oracle system updating prices properly, causing issues like improper liquidation.

We should, however, point out that as of the time of writing no shortfall event has ever happened.

AAVE staking options compared

Where to Stake AAVE

If you’re looking for an easy way to earn AAVE rewards, we’ve reviewed the top three exchange platforms that offer interest on AAVE below.

1. Binance – Best Overall For Staking AAVE

Binance‘s staking services offer a robust platform with unique advantages. While on-chain staking for Ethereum is available, Binance goes beyond with its diverse earning options. Simple Earn provides secure, hassle-free rewards on numerous tokens through flexible and fixed terms. Moreover, DeFi enthusiasts can access staking opportunities without navigating dApps.

Binance stands out as a top staking platform. Its intuitive interface ensures a user-friendly experience. The range of earning services is remarkable, featuring hundreds of coins and tokens. Staking AAVE is seamless, and achievable in a few clicks. Security measures are stringent, safeguarding users’ assets effectively.

What really makes it stand out is the quality of the platform, low fees, and its overall reputation.

How to stake AAVE on Binance

Of course, first you have to navigate to the Binance website, set up your account, and get some AAVE into your Binance wallet.

Step 1: Go to the Simple Earn page

Under the Finance tab at the top, click on Simple Earn to see all the cryptocurrencies available for earning interest on.

Step 2: Select AAVE

Enter “AAVE” into the search bar to find it. You’ll be able to choose the staking duration (if there’s more than one option) and then click on the ‘Subscribe’ button.

Step 3: Confirm the subscription details

Enter an amount of AAVE or click ‘Max’ to subscribe all your AAVE. You can toggle on the Auto-Subscribe option if you want to automatically resubscribe your rewards to compound the interest. Then tick the box to confirm you agree to the service agreement and finally click the ‘Confirm’ button.

2. Nexo – Best for Additional Rewards

We need to start out by pointing out that Nexo is not available in the US.

Nexo, while primarily offering on-chain Ethereum staking, also presents an alternative for passive crypto income through its crypto savings accounts. The platform’s user-friendly interface and security-centric approach are underscored by collateral requirements, transparency, and custodial insurance.

Established in 2018, Nexo operates as a high-interest cryptocurrency wallet with integrated exchange services. Beyond its wallet function, it provides diverse features, offering a substantial avenue for generating crypto interest.

Nexo’s impressive growth, accumulating over $13 billion in assets under management, reflects its commitment to providing a secure and accessible means for crypto holders to earn passive income through interest.

For AAVE stakers, Nexo introduces a nuanced approach. Opting for the “FLEX terms” strategy yields a 1% APR on staked AAVE, enabling accessibility for borrowing or trading. Alternatively, committing to a “Fixed Term” approach by locking AAVE for a month boosts the APR to 2%. Furthermore, Nexo offers an opportunity to enhance returns by earning rewards in NEXO tokens, leading to an additional 2% APR.

However, it’s important to note that these interest rates are only for platinum members, ie, those who hold at least 10% of their portfolio in NEXO tokens. Users with a smaller proportion of NEXO get lower interest rates.

How to stake AAVE on Nexo

First things first – make an account on the Nexo website, and get some AAVE.

3. OKX – Best for Advanced Users

OKX, a leading centralized cryptocurrency exchange, offers an array of services including Ethereum staking featuring daily rewards and slashing safeguards. Beyond Ethereum staking, OKX provides Simple Earn options, high-APY Structured Products, and easy DeFi protocol access. Despite prior controversies, OKX upholds its reputation for security and dependability.

With a user base exceeding 50 million, OKX facilitates trading for 340+ cryptocurrencies, catering to both novices and seasoned traders through an intuitive interface and trading tools. The exchange’s commitment to promptly list new tokens ensures diverse investment prospects. Additionally, it provides a comprehensive suite ranging from standard trading to integrated wallets, crypto-collateralized loans, P2P trading, and an NFT marketplace.

While not as beginner-centric as some competitors, OKX accommodates newcomers via Express Buy and Convert features.

The Simple Earn feature offers stable interest on AAVE and over 160 other cryptocurrencies. In some cases, you’ll get the choice between flexible and various fixed terms, though popular options can sell out.

How to stake AAVE on OKX

Before you even begin, you have to create an account on the OKX website and buy or deposit some AAVE tokens.

Step 1: Navigate to Simple Earn

Under the Grow tab at the top, click on ‘Simple Learn’ to see all the cryptocurrencies available for earning interest on.

Step 2: Choose and Subscribe to AAVE

Use the search bar to look for AAVE and click the dropdown arrow to see the terms available. Then click the ‘Subscribe’ button.

Step 3: Choose how much you want to stake and confirm

Enter how many AAVE tokens you want to stake or click ‘Max’ to stake them all. Then just tick the box to confirm you agree to the user agreement and click the ‘Subscribe’ button.

AAVE Staking Platforms Compared

How much can you make staking AAVE?

Staking rewards on a CEX are calculated in a pretty simple manner. Essentially you stake a certain amount of coin or tokens, and then after a set time period passes by, you gain a small amount on top of what you already staked. The most common measure of staking rewards is APR – Annual Percentage Rate.

APR for staking can differ based on the staking method or platform you’re using. Different platforms might offer varying rewards based on their own network dynamics, staking rules, and token economics. It’s important to research and compare different platforms to find the one that suits your preferences and risk tolerance.

For AAVE specifically, APR ranges between 0.5% to 4% on a CEX, or up to 6.5% through the AAVE app.

Staking rewards are typically paid out in the native token (in this case, AAVE). Keep in mind that the value of these rewards in fiat currency depends on the current market price of AAVE. If the price of AAVE increases, the fiat value of your staking rewards will also increase, and vice versa.

Also note that there are strategies to potentially increase your earnings when staking tokens. Reinvesting your staking rewards can compound your earnings over time. Additionally, some DeFi platforms allow you to use liquidity tokens obtained from staking in other yield-generating activities, potentially increasing your overall returns. However, these strategies also come with their own risks and complexities, so it’s essential to thoroughly research and understand the mechanisms involved before proceeding.

Is there a downside to staking AAVE?

Now, there are of course some downsides when it comes to staking AAVE. Note that some of these are relevant only to certain CEXs, but still need to be mentioned. The core downsides to staking AAVE are:

• Lack of access to staked coins – Staking can involve having your tokens “locked up” and losing access to them for a fixed period. Lock-up periods vary from CEX to CEX. However, using the official AAVE Safety Module staking approach, your tokens will be locked up for 20 days.

• Cooldown unstaking window – Unstaking through the AAVE Safety Module means waiting for 20 days, and then having a 2-day window to unstake. If you miss the window, you will have to wait all over again.

• Price Volatility – The cryptosphere is famously volatile. As with any other token, the value of AAVE might fluctuate over time, which could result in your tokens being worth much less.

• Opportunity Cost – Staking ties up your tokens, limiting your ability to take advantage of sudden investment opportunities or market movements. If a lucrative trading opportunity arises, you might miss out due to locked staked tokens.

• Token Depreciation – While staking rewards provide additional tokens, if the value of the staked token decreases significantly, the rewards earned might not offset the overall loss in token value.

• Security Concerns – While staking on reputable platforms is generally secure, there’s always a risk of platform hacks or vulnerabilities. Stakers could potentially lose their staked AAVE due to security breaches.

• Regulatory Uncertainty – Another part of crypto’s volatility is regulation. Regulatory changes or crackdowns on cryptocurrency activities in your jurisdiction could impact staking operations. Compliance challenges could arise, affecting the viability of staking AAVE.

Should I stake AAVE?

The decision of whether to stake AAVE or not falls squarely on the staker’s shoulders. Any type of investing or trading (and staking can be categorized as one or the other) is difficult, but whether it’s a good idea or not can only be decided by the investor themselves.

With that in mind, there are a couple of things you should think about in order to reach a decision more easily:

• Risk vs Reward – AAVE staking involves potential rewards, but also comes with certain risks. Assess the potential gains against the possibility of loss before deciding to stake.

• Tax Implications – Be keenly aware of the tax implications surrounding crypto in your region. For example, in the US staking rewards are considered income upon receipt, so they are in turn governed by income tax.

• Skill Level and Time Investment – There is a certain amount of research you will need to do to maximize the results you get from staking AAVE. This, of course, is mitigated by your familiarity with crypto and investing in general.

• HODL or trade – Or rather, being aware of your goals. Do you plan to hold long term and wait for AAVE prices to explode, or do you plan to actively participate and trade on a regular short-term basis? Staking is better suited to the former.

• Future Value – Similar to our previous points about time investment and goals, research the AAVE project’s roadmap, development updates, and potential for growth. Consider how staking aligns with your long-term investment goals.

• Risk Tolerance – This refers to an individual’s ability and willingness to endure potential losses or fluctuations in the value of their investments without becoming overly anxious or making impulsive decisions. This involves both your temperament, but also your savings. Try to become aware of your own risk tolerance.

• Platform stability and reputation – Choose a reputable staking platform or exchange with a track record of security and reliable payouts. This reliability does not only refer to the honesty of the platform, but also to whether the platform is stable, free of bugs and performance issues.

Final Thoughts

And there you have it folks, a thorough guide on staking AAVE. Staking AAVE coin in 2024 offers a great source for passive crypto interest. Its staking rewards on CEXs are relatively modest, while using the AAVE app is pretty risky.

However, AAVE is still a solid choice, especially if you stake it through Binance, due to the overall quality and stability of the platform, and its low fees. Just remember that to be on the safe side you should never stake more than you could afford to lose.

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