Aave Protocol Deep Dive
A comprehensive exploration of the leading decentralized liquidity protocol powering the future of decentralized finance
Introduction to Aave
Aave is an open-source, non-custodial protocol enabling the creation of money markets where users can participate as suppliers or borrowers. Suppliers provide liquidity to the market to earn a passive income, while borrowers can borrow in an over-collateralized (perpetually) or under-collateralized (one-block liquidity) fashion.
Fun Fact: The name "Aave" comes from the Finnish word for "ghost," reflecting the protocol's focus on creating a transparent, open financial system that works in the background—like a helpful ghost in the machine.
As one of the foundational pillars in decentralized finance (DeFi), Aave has revolutionized how users lend and borrow digital assets without traditional intermediaries. Operating across multiple blockchain networks including Ethereum, Polygon, Avalanche, and several Layer 2 solutions, Aave uses smart contracts to facilitate lending and borrowing in a transparent, efficient, and secure manner.