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

Unlock Passive Income: Earn Interest on Your ATOM via Aave

DeFi platforms like Aave revolutionize how crypto holders generate passive income. While ATOM (Cosmos Hub’s native token) isn’t natively supported on Aave, you can still earn competitive interest by converting it to wrapped versions compatible with Ethereum or Polygon networks. This guide details every step to safely earn yield on your ATOM holdings using Aave, including bridging, depositing, and risk management. Perfect for Cosmos enthusiasts exploring DeFi opportunities.

Prerequisites Before You Start

• ATOM Tokens: Hold ATOM in a non-custodial wallet (e.g., Keplr, Cosmostation).
• EVM-Compatible Wallet: MetaMask installed and configured for Ethereum or Polygon.
• Bridging Funds: Small amount of ETH (for Ethereum gas) or MATIC (for Polygon gas).
• Gravity Bridge Access: Essential for converting ATOM to wrapped tokens.

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

Step 1: Bridge ATOM to Ethereum/Polygon Using Gravity Bridge

1. Visit Gravity Bridge (official Cosmos-Ethereum bridge).
2. Connect your Keplr wallet (Cosmos side) and MetaMask (Ethereum/Polygon side).
3. Select ATOM as the source token and choose your destination chain (Ethereum for higher security, Polygon for lower fees).
4. Enter the ATOM amount to bridge and approve the transaction. Wait ~10-20 minutes for completion.
5. Receive wrapped ATOM (GRAV or WETH-ATOM) in your MetaMask wallet.

Step 2: Deposit Wrapped ATOM into Aave

1. Go to the Aave Protocol dashboard.
2. Connect your MetaMask wallet and switch to the bridged network (Ethereum/Polygon).
3. Under ‘Deposit’, search for your wrapped ATOM token (e.g., GRAV or WETH-ATOM).
4. Enter the amount to deposit and review interest rates (APY varies based on network demand).
5. Approve the token contract (one-time) then confirm the deposit transaction.

Step 3: Monitor & Manage Your Earnings

• Track accrued interest in real-time via Aave’s dashboard.
• Withdraw funds anytime (subject to network conditions).
• Reinvest earnings or compound manually for higher yields.

Why Earn ATOM Interest on Aave?

• Competitive APY: Often outperforms traditional Cosmos staking rewards (e.g., 3-8% vs. Aave’s 1-5% variable APY*).
• Liquidity: Withdraw funds faster than Cosmos unstaking periods.
• Ecosystem Integration: Use deposited ATOM as collateral for loans.
• Multi-Chain Flexibility: Choose between Ethereum (security) or Polygon (low fees).

*Rates fluctuate based on market demand.

Key Risks to Consider

• Bridging Risks: Bridge vulnerabilities or user errors during transfer.
• Smart Contract Risk: Potential exploits in Aave or token contracts.
• Impermanent Loss: Not applicable for simple deposits (only affects liquidity providers).
• Market Volatility: ATOM price fluctuations affect USD value of earnings.
• Gas Fees: Ethereum transactions can be costly; Polygon recommended for small amounts.

Frequently Asked Questions (FAQ)

Can I earn interest on native ATOM without bridging?

No. Aave operates on EVM chains (Ethereum, Polygon, etc.), so you must convert ATOM to a wrapped version via Gravity Bridge first.

Which network is better: Ethereum or Polygon?

Ethereum offers higher security but expensive gas fees. Polygon provides faster/cheaper transactions—ideal for smaller deposits. Aave supports both.

How often is interest paid?

Interest accrues every second and compounds automatically. You earn in real-time based on the deposited token.

Is my ATOM insured on Aave?

Aave has no FDIC insurance. Funds rely on smart contract security. Use audited platforms and never share private keys.

Can I use my Keplr wallet directly with Aave?

No. Aave requires EVM-compatible wallets like MetaMask. Keplr is for Cosmos-native interactions only.

Maximize Your Crypto Strategy

Earning interest on ATOM via Aave unlocks new revenue streams for Cosmos holders. While bridging adds complexity, the flexibility and yield opportunities justify the effort for many. Always test with small amounts first, stay updated on network fees, and never invest more than you can afford to lose. Ready to put your ATOM to work? Follow these steps to start earning today!