Aave (AAVE): how it works, supply and reviews
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Key facts
- Ticker
- AAVE
- Official site
- aave.com
- Source code
- github.com/aave
Data: CoinGecko (trading activity) and CoinPaprika (links), 2026-10-27. Only projects that still trade with meaningful volume are listed.
What is Aave
Aave is a decentralised, non-custodial liquidity protocol where users supply crypto assets to earn interest and borrow against collateral on Ethereum and other networks. AAVE is the protocol's governance token, held and voted with by the Aave DAO.
Network and consensus
| Parameter | Details |
|---|---|
| Type | Lending and borrowing protocol (smart contracts); AAVE is an ERC-20 token on Ethereum |
| Runs on | Ethereum and other major networks (Aave v3 is deployed on 14+ networks) |
| Launched | 2020, by the team that previously built ETHLend |
| How lending works | Suppliers receive interest-bearing aTokens; borrowers must be over-collateralised and can be liquidated when the Health Factor falls below 1 |
Supply and issuance
| Parameter | Details |
|---|---|
| Initial distribution | 16 million AAVE created by migrating LEND at 100 LEND per 1 AAVE: 13 million for LEND holders, 3 million to the Ecosystem Reserve |
| Buyback | The Aave DAO buys AAVE with protocol revenue since April 2025; bought tokens go to the Ecosystem Reserve and are not burned |
What AAVE is used for
- Voting on Aave governance proposals or delegating voting power
- Staking in the safety module as a backstop in case of insolvency, earning rewards
- Collateral in Aave markets to borrow other assets
- Holding staked AAVE can lower GHO borrowing rates
Who develops and governs Aave
- Governance
- Aave DAO: AAVE, stkAAVE and aAAVE holders on Ethereum vote on proposals (AIPs) that execute on-chain after a timelock
- Company
- Aave Labs, the original author and a contributor; it states it does not control or operate the protocol
- Founders
- Aave Labs is led by CEO Stani Kulechov
- Open source
- Yes; the protocol is made of open-source smart contracts
History
| Date | Event |
|---|---|
| 2020 | Aave launches, built by the team behind ETHLend. |
| August 2024 | Governance approves the Aavenomics update, including an AAVE buyback programme. |
| April 2025 | The DAO starts buying back AAVE with protocol revenue. |
Security and audits
- Aave reports 65 audits and AI-assisted reviews, plus bug bounty programmes with over $5 million in live rewards.
- Umbrella, an on-chain backstop, can burn staked aTokens or GHO to cover bad debt in Aave v3 without a governance vote.
- Aave states that every incident ends in a public post-mortem.
Official AAVE contracts
| Network | Contract address |
|---|---|
| Ethereum | 0x7Fc66500c84A76Ad7e9c93437bFc5Ac33E2DDaE9 |
| Arbitrum | 0xba5DdD1f9d7F570dc94a51479a000E3BCE967196 |
| Base | 0x63706e401c06ac8513145b7687a14804d17f814b |
| Optimism | 0x76FB31fb4af56892A25e32cFC43De717950c9278 |
| Polygon | 0xD6DF932A45C0f255f85145f286eA0b292B21C90B |
AAVE is native to Ethereum; versions on other networks are bridged through canonical network bridges.
Risks and caveats
- Borrowers whose Health Factor falls below 1 can be liquidated, losing part of their collateral at a discount.
- Stakers in the backstop take on slashing risk: staked assets can be burned to cover bad debt.
- Moving AAVE to and from Ethereum depends on each network's bridge being available.
Official links
- Website: aave.com
- Docs: aave.com/docs
- Source code: github.com/aave
- Governance forum: governance.aave.com
- Security: aave.com/security
- Blog: aave.com/blog
Questions and answers
What is Aave?
Aave is a non-custodial lending protocol on Ethereum and other networks; AAVE is its governance token.
Who created Aave?
Aave was built by the team behind ETHLend and launched in 2020; Aave Labs, led by Stani Kulechov, is its original author.
What is the supply of AAVE?
16 million AAVE were issued in the LEND migration: 13 million for LEND holders and 3 million for the Ecosystem Reserve.
How is Aave governed?
AAVE, stkAAVE and aAAVE holders vote on proposals through the Aave DAO; approved changes execute on-chain after a 1- or 7-day timelock.
Sources
- CoinGecko — Aave
- CoinPaprika — Aave
- Aave Docs — AAVE token
- Aave Docs — Governance
- Aave Docs — Aave v3 overview
- Aave Docs — Umbrella
- Aave — About
- Aave — Security
- Aavenomics (GitHub)
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