Aave is the largest decentralized lending and borrowing protocol by TVL, enabling users to deposit crypto assets to earn variable or stable interest rates, or borrow against their crypto collateral. AAVE is the governance and staking token, allowing holders to vote on protocol parameters and stake in the Safety Module to earn rewards. Aave also issues GHO, a native overcollateralized stablecoin.
Aave v3 operates across Ethereum, Polygon, Avalanche, Arbitrum, and other networks. Suppliers deposit assets into shared liquidity pools and receive aTokens representing their balance plus accrued interest. Borrowers must over-collateralize (e.g., 150% collateral ratio) and choose between variable or stable interest rates. Aave's 'efficiency mode' (eMode) allows higher LTV ratios for correlated asset pairs. Flash loans allow uncollateralized borrowing within a single transaction block for arbitrage or liquidation bots. The Safety Module holds staked AAVE as a backstop for protocol shortfalls. GHO is minted by borrowers against their Aave collateral. Aave V4 launched March 2026 with unified liquidity and improved risk management.
Traditional lending requires trusted intermediaries, creditworthiness checks, and custody of collateral. Aave enables permissionless lending and borrowing secured entirely by smart contracts, available to anyone globally with crypto collateral. Flash loans uniquely enable sophisticated DeFi strategies (liquidations, arbitrage, collateral swaps) that are impossible in traditional finance.
The largest DeFi lending protocol by TVL ($14B+), with flash loans as a unique primitive, cross-chain deployment on 10+ networks, a native stablecoin (GHO), and a Safety Module that backs protocol solvency with staked AAVE.
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Supply figures and project details are approximate and may not reflect the latest changes. Always verify from official sources before making decisions. This information is for educational purposes only — not financial advice.