Aave is a decentralized finance protocol that allows people to lend and borrow crypto. Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a flash loan using this liquidity. One of many of emerging DeFi cryptocurrencies, Aave is a decentralized lending system that allows users to lend, borrow, and earn interest on crypto assets, all without middlemen. This allows a borrower to gain exposure to different cryptocurrencies without owning them outright. Aave provides holders with discounted fees on the platform, and it also serves as a governance token giving owners a say in the future development of the protocol. Aave has several unique selling points when compared with competitors in an increasingly crowded market. During the DeFi craze in the summer of 2020, it was one of the biggest projects in terms of the total value of crypto locked in its protocol. The project allows people to borrow and lend in about 20 cryptocurrencies, meaning that users have a greater amount of choice. First of Aave’s flagship products are “flash loans,” which have been billed as the first uncollateralized loan option in the DeFi space. There’s a catch: they must be paid back within the same transaction. The second big selling point is how those who borrow through Aave can alternate between fixed and variable interest rates. While fixed rates can provide some certainty about costs during times of volatility in the crypto markets, variable rates can come in handy if the borrower thinks that prices will fall soon.
Original author – Stani Kulechov
Initial release – January 2020
Development status – Active
Website – aave.com