Aave is a decentralised non-custodial liquidity market protocol where users can participate as depositors or borrowers. Depositors provide liquidity to the market to earn a passive income, while borrowers are able to borrow in an over-collateralised (perpetually) or under-collateralised (one-block liquidity) fashion.

The cost of interacting with Aave protocol?

  • Interacting with the protocol requires transactions and so transaction fees for Ethereum Blockchain usage, which depend on the network status and transaction complexity.

Where are my deposited funds stored?

  • Your funds are allocated in a smart contract. The code of the smart contract is public, open source, formally verified and audited by third party auditors. You can withdraw your funds from the pool on-demand or export a tokenised (aTokens) version of your lender position. aTokens can be moved and traded as any other cryptographic asset on Ethereum.

Aave (AAVE) token

  • AAVE is used as the centre of gravity of Aave Protocol governance. AAVE is used to vote and decide on the outcome of Aave Improvement Proposals (AIPs). Apart from this, AAVE can be staked within the protocol Safety Module (address) to provide security/insurance to the protocol/depositors. Stakers earn staking rewards and fees from the protocol.

Aave Protocol tokenomics

  • The Aave Protocol aims to enable global permissionless tokenized assets money markets
  • The total supply of AAVE is 16M tokens, in which 3M are allocated to the Aave Ecosystem Reserve and controlled by the AAVE token holders

Aave V3 Technical Paper

Aave's Risk Framework

The documentation analyses the fundamental risks of the protocol and describes the processes in place to mitigate them

  1. Aave's Risk Framework


  1. topic.cryptoasset