Aave is a well-known DeFi protocol that enables lending and borrowing without a bank. People can deposit crypto to make it available for others to borrow, while borrowers take out loans by locking up their own crypto as collateral, all handled automatically by smart contracts.
Because there is no credit check, borrowing on Aave typically requires depositing more value than is borrowed. If collateral falls too far in value, it can be liquidated to repay the loan. Interest rates adjust based on how much of a given asset is supplied and borrowed.
This entry explains what Aave is and how DeFi lending works through it. It is educational. Using such protocols carries real risks, including smart contract flaws and liquidations, and nothing here recommends lending, borrowing, or holding any asset.
Frequently Asked Questions
What does Aave let people do?
It lets people lend crypto to earn, or borrow crypto by locking up collateral, all through smart contracts rather than a bank, with interest rates that adjust to supply and demand.
What are the risks of using Aave?
Risks include smart contract flaws, changing interest rates, and liquidation of collateral if its value falls too far. Using any DeFi protocol carries real, self-managed risk.
