Swap AAVE at the Best Rate

What is AAVE?

AAVE is an ERC-20 that governs the Aave Protocol, a set of lending markets where suppliers deposit assets to earn interest and borrowers post collateral to take loans. The protocol also issues GHO, a decentralized stablecoin minted against Aave collateral. AAVE holders steer all of it, but the token is not a deposit receipt and pays no interest by itself.

The project began as ETHLend, a 2017 peer-to-peer lending venture by Stani Kulechov, and relaunched as the pooled Aave Protocol in 2020. Its markets now run on Ethereum and a dozen other networks, all under one DAO.

How AAVE works

The protocol pools deposits per asset. Suppliers receive aTokens that accrue interest continuously, borrowers post collateral and pay rates set by utilization, and positions that fall below their collateral threshold are liquidated by third parties. Aave v3 spreads these markets across networks with risk parameters tuned per asset.

Stakers provide the protocol's backstop. The legacy Safety Module can slash staked AAVE by up to 30 percent to cover shortfalls, and since 5 June 2025 Umbrella replaces that coverage with staked aTokens that are burned automatically when a deficit appears in the matching asset, removing the need for a governance vote during an incident.

AAVE supply and tokenomics

Supply is capped at 16 million AAVE: 13 million were reserved for LEND holders who migrated at 100 LEND per AAVE from October 2020, and 3 million seeded the DAO's ecosystem reserve. There is no ongoing emission schedule; staking rewards are budgeted by governance from the treasury.

Since April 2025 the flow has reversed: the DAO buys AAVE with protocol revenue. The buyback program approved in the Aavenomics update started at up to $1 million per week, and an October 2025 vote made it permanent with a $50 million annual budget executed by the Aave Finance Committee. Repurchased tokens go to the ecosystem reserve to fund staking rewards and contributors rather than being burned.

Who builds AAVE

Development is led by Aave Labs, part of Avara, the company Stani Kulechov founded, but the deployed protocol belongs to the DAO: contracts change only through passed proposals. Service providers, risk managers and the finance committee are appointed and funded by governance votes.

How AAVE is governed

Aave governance is fully on-chain. Proposals, called AIPs, are voted with AAVE, staked AAVE and aAAVE, and passing proposals execute through timelocked contracts: risk parameters, asset listings, new deployments, treasury spending and the token economics itself all change this way.

The DAO also delegates within limits. The Aave Finance Committee executes buybacks inside a governance-set budget, and appointed risk teams adjust parameters under mandates, with every mandate tracing back to a vote.

AAVE risks and considerations

Staking AAVE is not passive safety: backstop positions exist to be slashed when bad debt appears, in the legacy module by up to 30 percent. Lending markets carry their own hazards, from oracle failures to cascading liquidations, and a large enough shortfall would reach the backstop.

AAVE pays nothing by default; the buyback program routes value to the DAO reserve, not to holders' wallets, and governance can resize or stop it. Tokens labeled AAVE on other networks are bridged copies of the Ethereum original, so verify the address for the chain you use.