Aave is a lending protocol and platform built on Ethereum and launched in January 2020 by the creators of ETHLend. Users on Aave can earn compounding interest on or borrow assets against collateral. Each supported asset is aggregated in its own liquidity pool and users can choose between a variable interest rate based on supply and demand or a fixed interest rate.
Collateral balances are represented by ERC-20 aTokens at a 1:1 ratio to the underlying assets they represent. Interest is compounded automatically and paid to lenders with aTokens, meaning lenders will steadily see their aToken balance increase over time. Users can borrow assets against their aTokens. aTokens are freely transferable and can be used on many other DeFi protocols. aTokens can be redeemed for their underlying collateral at any time.
Aave supports flash loans, which are uncollateralized loans where users borrow and repay the balance of the loan in a single transaction, meaning flash loan users do not need to put up any initial capital. Flash loans are a complex product aimed at developers and can be used to arbitrage across multiple DeFi protocols.
Aave is currently governed by LEND, an ERC-20 token that was formerly the utility token for ETHLend. Aave has announced a transition to fully decentralized governance that includes a token swap where users exchange LEND for AAVE, a new ERC-20 governance token with staking rewards. Some AAVE will be distributed to users of the platform in a liquidity mining campaign.
Aave's total value locked (TVL) has quickly grown to over $1.2 billion, making it one of the largest DeFi protocols. LEND has a circulating market cap of over $700 million.
Aave has undergone security audits by OpenZeppelin, Trail of Bits, and Consensys Diligence. Aave maintains a bug bounty program.