Aave is an open source, unmanaged money market platform that offers a variety of debt based products in a decentralized manner. As a DeFi platform built on Ethereum, Aave houses ETH, a variety of stablecoins like DAI and USDC, and a variety of ERC-20 tokens from the decentralized financial ecosystem. Aave users can earn interest by depositing digital assets in a liquidity pool, Indicates an asset of the form. If users deposit their tokens in Aave's liquidity pool, aToken, which represents the interest-generating token held by the user. To borrow from Aave, users must post enough collateral in another asset to back the loan. This secures the money in the agreement in case the loan fails to be repaid or the value of the collateral falls.

Steady-rate loans have a steady rate of interest over time, similar to traditional bank loans. Floating rate loans have dynamic interest rates that fluctuate according to supply and demand. As with many DeFi lending platforms, a key element of the Aave market mechanism depends on excessive collateral, which can remain open as long as there is sufficient collateral to support both stable and floating rate loans. Flash lending is a novel experimental lending mechanism that requires no collateral, but the loan must be repaid within a single Ethereum block. Flash loans are designed for developers or people with some technical knowledge.

(DAO) governance model in which holders of AAVE governance tokens are incentivized to securely manage and develop the platform by voting and pledging tokens. Holders are responsible for recommending and voting on changes to the platform and jointly managing risk and reward leverage in the Aave money market. While Aave was originally launched in 2017 using native LEND tokens, its DAO's first Aave improvement proposal voted to approve the token migration to Aave tokens, which was implemented in September 2020.