How Are Borrowers Repaying Their Loans On Aave?

AAVE empowers crpyto holders to borrow money instead of selling their assets. It is important to understand that selling your crypto assets means closing your position on that particular asset. Therefore, if you hold an asset long, you would not be entitled to the potential upside value gain from the asset. If you borrow, you are able to get liquidity (working capital) without having to sell your assets. The main purpose for which people borrow is to cover unexpected expenses, leverage their holdings or to take advantage of new investment opportunities. You will be able to borrow the maximum amount based on the amount you have deposited and the availability of liquid resources.
We will investigate how AAVE borrowers acquired funds to repay their loans and how they repaid them. Below is a chart showing how many repayments were made through the AAVE protocol.

The chart shows the repayments that have been made by crypto currencies over the past seven days and gives us an insight into the top repaid crypto currencies. USDC and USDT are the two most repaid crypto currencies, as you may have noticed. 

The chart shows the repayments that have been made by crypto currencies over the past seven days and gives us an insight into the top repaid crypto currencies. USDC and USDT are the two most repaid crypto currencies, as you may have noticed. 
Now let’s take a look at how they are paying back their debts. Using the following methodology, we can gain a better understanding of how the borrowers are obtaining funds for repayment.

  1. Identify all the repayment transactions that have taken place 
  2. Understand the details of the transaction before repayment and locate the transaction before repayment 
  3. Identify the smart contract functions that were used as part of the transaction before repayment

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