How to Earn Interest on ATOM via Aave: Step-by-Step Guide (2023)

Unlock Passive Income: Earning Interest on ATOM with Aave

DeFi platforms like Aave revolutionize how crypto holders generate passive income. While ATOM (Cosmos Network’s native token) isn’t natively supported on Aave, you can still earn interest by converting it to wrapped ATOM (wATOM) on Ethereum-compatible chains. This step-by-step guide demystifies the process, helping you safely put your ATOM to work. Learn how to bridge assets, navigate Aave’s interface, and maximize yields while understanding key risks.

Why Earn Interest on Crypto with Aave?

Aave is a leading decentralized lending protocol where users earn interest by supplying assets to liquidity pools. Unlike traditional banks, Aave offers:

• Higher APYs: Often outperform traditional savings accounts
• Transparency: All transactions are verifiable on-chain
• Permissionless Access: No KYC or minimum balances
• Flexibility: Withdraw funds anytime

Note: ATOM must be bridged to wATOM (ERC-20 token) since Aave primarily operates on Ethereum Virtual Machine (EVM) chains.

Prerequisites Before Starting

• ATOM Tokens: In a non-custodial wallet (e.g., Keplr, Cosmostation)
• EVM-Compatible Wallet: MetaMask or Trust Wallet set to Ethereum/Polygon
• Gas Fees: ETH (for Ethereum) or MATIC (for Polygon) for transactions
• Bridge Access: Accounts on bridging services like Gravity Bridge or Axelar

Step-by-Step: Earn Interest on ATOM via Aave

1. Bridge ATOM to wATOM
   • Visit a cross-chain bridge (e.g., Gravity Bridge)
   • Connect your Cosmos wallet (Keplr) and EVM wallet (MetaMask)
   • Select ATOM as the source asset and Ethereum/Polygon as the destination
   • Confirm the transaction and wait for bridging completion (~10-20 mins)
2. Access Aave Protocol
   • Go to app.aave.com
   • Connect your MetaMask/Trust Wallet
   • Switch to the correct network (Ethereum/Polygon) in your wallet
3. Supply wATOM to Aave
   • Under “Supply Assets,” search for wATOM
   • Click “Supply” and enter the amount
   • Review interest rates (APY varies based on pool demand)
   • Approve the contract and confirm the transaction
4. Monitor & Manage Earnings
   • Interest accrues in real-time and compounds automatically
   • Track earnings via Aave’s dashboard or DeFi portfolio trackers
   • Withdraw anytime by clicking “Withdraw” under your supplied assets

Key Risks & Safety Tips

• Bridge Vulnerabilities: Use audited bridges (e.g., Gravity Bridge)
• Smart Contract Risks: Aave is audited but not risk-free
• Impermanent Loss: Minimal in lending (vs. liquidity pools)
• Gas Fees: Use Polygon for lower costs (~$0.01-0.10 per tx)
• APY Fluctuations: Rates change based on market demand

Always start with small amounts to test the process!

Frequently Asked Questions (FAQ)

Can I earn interest directly with native ATOM on Aave?

No. ATOM must be converted to wrapped ATOM (wATOM) via a cross-chain bridge since Aave operates on EVM chains. Native Cosmos support isn’t available yet.

What’s the typical APY for wATOM on Aave?

APY varies (historically 1-5%). Check real-time rates on Aave’s app. Rates depend on borrowing demand and change frequently.

How often is interest paid?

Interest compounds every Ethereum block (~12 seconds). Earnings update continuously in your Aave dashboard.

Are there withdrawal limits or lock-up periods?

No lock-up periods. Withdraw anytime, subject to network gas fees and liquidity availability.

Can I use Polygon instead of Ethereum?

Yes! Aave supports Polygon. Bridge ATOM to Polygon via Axelar, then supply wATOM. This reduces gas fees by 99%.

Is my wATOM insured against hacks?

Aave has no deposit insurance. Funds rely on protocol security. Only risk what you can afford to lose.

Maximizing Your ATOM Earnings

For higher yields, consider pairing wATOM deposits with Aave’s “stable rate” borrowing or exploring yield aggregators like Yearn Finance. Always DYOR (Do Your Own Research) and monitor gas fees to optimize returns. As cross-chain tech evolves, earning interest on Cosmos-native assets will become simpler—but today, bridging unlocks powerful opportunities for ATOM holders.