Aave AAVE

Aave is the largest venue for lending without an intermediary: depositors add assets to shared pools, borrowers draw from them against collateral, and the interest rate moves automatically with how much of a pool is currently borrowed. The project began as ETHLend, matching individual lenders and borrowers directly, before moving to the pooled design. Liquidation triggers automatically once collateral falls below its threshold and is carried out by third parties for a fee.

Its best-known invention, since copied across the industry, is the flash loan: funds are lent with no collateral on the condition that they are repaid within the same transaction, which underpins arbitrage and position refinancing. The protocol runs on many networks at once, each with its own markets and risk parameters.

The AAVE token governs the protocol and doubles as a backstop — a portion staked in the safety module can be sold off to cover a shortfall in the system. The protocol also issues its own stablecoin, GHO.

The flash loan — uncollateralised borrowing repaid inside a single transaction — originated here and is now used across the industry.