Aave
Aave is a decentralized finance protocol for lending and borrowing cryptocurrencies without intermediaries.
Aave is a decentralized finance protocol (DeFi) that enables the lending and borrowing of cryptocurrencies without the involvement of intermediary financial institutions.
Quick Facts
- Type:
- Decentralized Liquidity Protocol
- Primary blockchain:
- Ethereum (Multi-chain support included)
- Founders:
- Stani Kulechov
- Key innovation:
- Flash Loans
Lore & Background
Aave was founded in 2017 under the name ETHLend by Stani Kulechov, a Finnish lawyer. Originally, the project was based on a peer-to-peer lending model. In January 2020, the protocol was relaunched under the new name Aave (Finnish for 'ghost') with a liquidity pool model. The associated governance token carries the same name (AAVE) and allows holders to vote on protocol changes.
Reader's Guide
Aave allows crypto lending and borrowing without the use of a central authority. Users can deposit various cryptocurrencies—such as Ether, USDC, or DAI—into pools. These funds are then used as collateral for issuing loans. In return, depositors receive variable interest earnings. Borrowers must provide collateral that exceeds the value of the loan. Aave allows users to choose between variable and stable interest rates. The protocol also supports flash loans—loans that must be taken out and repaid within a single block and are therefore suitable only for experienced developers. In 2023, Aave announced the launch of a decentralized stablecoin called GHO. This stablecoin is backed by collateral deposited within the Aave protocol.
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