Aave is a decentralized non-custodial money 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 overcollateralized (perpetually) or undercollateralized (one-block liquidity) fashion.
Please join our Aave community Discord server; our team and members of the community look forward to helping you to understand and use Aave.
This video may help you as introduction to our protocol:
Our protocol has been audited and secured. The protocol is completely open source, which allows anyone to interact with our user interface client, API or directly with the smart contracts on the Ethereum network. Being open source means that you are able to build any third-party service or application to interact with our protocol and enrich your product.
In order to use the service, you simply deposit your preferred asset and amount. After depositing, you will earn passive income based on the market borrowing demand. Additionally, depositing assets allows you to borrow by using your deposited assets as a collateral. Any interest you earn by depositing funds helps offset the interest rate you accumulate by borrowing.
The platform has 2 type of fees. From borrowers, a 0.00001% of the loan amount is collected on loan origination, from which 20% is used for referral integrators and 80% is swapped to the LEND token and burned. From Flash Loans, a 0.09% is collected from the loan amount, from which 70% is redirected as extra income for depositors of the protocol and 30% is split using the same 20%/80% model of the origination fee. There are also transaction fees for Ethereum Blockchain usage, these fees depend on the network status and transaction complexity.
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 tokenized (aTokens) version of your lender position. aTokens can be moved and traded as any other cryptographic asset on Ethereum.
No platform can be considered entirely risk free. The risks related to our platform are the smart contract risk (risk of a bug within the protocol code) and liquidation risk (risk on the collateral liquidation process). We take every possible step required to minimize the risk as much as possible-- the protocol code is public and open source and it has been audited. Additionally, we have an ongoing bug bounty campaign live and running. You can find additional risk and security related information in our risk framework and security and audits sections.
LEND is used to govern the protocol, we are currently working on the implementation of the governance. Apart from this it will be possible to be staked within the protocol to provide security/insurance to the protocol/depositors and that way earn staking rewards and fees from the protocol. Also currently LEND token is burnt based on the fees gathered in the protocol, so holders benefit on the reduction of the supply. We have released our documentation with specific details about tokenomics and governance for more details please check our flash paper our full documentation and join the discussion in our governance forum.
If you are unsure about any specific terms feel free to check our Glossary.
Feel free to refer to the White Paper for a deeper dive into Aave Protocol mechanisms. Developers can access our Documentation for a technical description of the Aave decentralized lending pool protocol. For a detailed risk analysis, please visit our risk framework.