All About Aave Protocol (AAVE)

An Open-Source DeFi Protocol.

Originally introduced as ETHLend in 2017, Aave was created as a decentralized peer-to-peer lending platform after it raised $16.2 million in an Initial Coin Offering (ICO).

They rebranded to Aave when they switched to a liquidity pool model and launched Aave Protocol in 2020—an open-source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.

  • Aave protocol is a decentralized, open-source, and non-custodial money market protocol.
  • Depositors earn interest by providing liquidity to lending pools.
  • Borrowers can obtain overcollateralized loans by using the liquidity from these pools.
  • Like other DeFi platforms, such as Compound, deposits are tokenized as aTokens. These accrue interest in real-time.
  • Aave Protocol supports more than 15 different assets, with a large selection of stablecoins.
  • AAVE tokens are used for fee reductions and will also be used for governance rights at the protocol level for future smart-contract updates. AAVE tokens are also burnt from the fees collected from the Aave Protocol.
  • Since January 2020, Aave protocol also offers undercollateralized solutions: flash loans allow developers to borrow instantly and easily without any collateral. These flash loans are designed to be integrated into other products and services.

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