About
Aave is a leading decentralized finance (DeFi) protocol built on Ethereum that enables users to lend and borrow cryptocurrencies without intermediaries. The platform was designed to provide an open and non-custodial marketplace where liquidity providers can supply assets to earn interest and borrowers can take out loans by over-collateralizing with other tokens. Aave pioneered several core DeFi innovations, including dynamic interest rate models and flash loans, which enable uncollateralized borrowing when the loan is repaid within a single transaction.
The protocol traces its origins to ETHLend, a peer-to-peer lending marketplace founded in 2017 by Stani Kulechov. In 2018, ETHLend rebranded to Aave Finnish for “ghost” and transitioned to a pooled liquidity model that became the foundation of its DeFi money markets. Aave V1 launched in early 2020, followed by upgraded versions (V2 and V3) that introduced features such as debt tokenization, collateral swaps, risk isolation modes, and per-asset caps to enhance capital efficiency and risk management.
The AAVE token itself functions as the governance and safety backbone of the protocol. Holders can propose and vote on Aave Improvement Proposals (AIPs) that affect parameters like asset listings, risk settings, and treasury allocations. Additionally, AAVE can be staked in the Safety Module to provide a security buffer for the protocol against shortfall events, with stakers earning rewards in return. Community-driven governance and staking align economic incentives toward long-term network health.
Beyond core lending and borrowing, Aave’s ecosystem has expanded across multiple blockchains and use cases. It supports deployments on several EVM-compatible networks, integrates oracle price feeds, facilitates flash loans for developers and arbitrageurs, and oversees native protocol innovations such as the overcollateralized stablecoin GHO. Its multi-chain presence and robust treasury mechanisms foster an open financial infrastructure with broad DeFi utility.
