What is Aave?
Aave is a money market protocol that facilitates over-collateralized borrowing and lending of crypto assets. Depositors can lend tokens to any money market listed on Aave and earn interest by holding aTokens. Borrowers who have supplied sufficient collateral can take out loans from any money market at fixed or variable interest rates. When the collateral value is not enough to maintain a predetermined loan-to-value ratio, the loan is subject to liquidation. Any user may liquidate the loan by purchasing the collateral at a discounted price. Borrowers who repay loans in the same transaction can borrow without posting collateral by using flash loans.
AAVE is the governance token of Aave. Token holders can vote to support different collateral assets, change permitted loan-to-value ratios, deploy treasury assets, and other similar decisions. Token holders can also stake tokens into a safety module to earn token rewards and backstop any bad debt in the system.
