I am trying to get more experience in the world of blockchain beyond buying and selling coins.
I noticed on AAVE there are different markets (ex. Ethereum, Arbitrum, Avalanche, etc.) and also different versions (2 and 3).
Aside from differing lending/borrowing availability and supply/demands, and probably APYs, what is the reason for the various markets and versions? How did different markets come to AAVE? Is anyone one market better than another and for what reason? I can imagine Ethereum is the best due to its reputation but would that be wrong of me to assume?
Thanks to anyone who can help me wrap my head around AAVE and help me on my journey into the world of DeFi.
You can only access the Ethereum market on the Ethereum blockchain, you can only access the Arbitrum AAVE market on the Arbitrum blockchain and so on…
Regarding V2 and V3, they are entirely different lending systems. V3 was deployed years after V2 and has many differences.
The reason for different markets, other than blockchain and version differences is that they create isolated lending environments with different risk profiles. For example, let’s say AAVE wants to attract dogecoin holders and want to add $DOGE as collateral, but it doesn’t match the risk profile of the main lending market. They can create a separate lending market for $DOGE and other tokens, where only people comfortable with the volatility of $DOGE would be willing to supply liquidity