Aave (AAVE) is associated with a decentralized finance lending protocol. Users can supply supported crypto assets, borrow against collateral, and interact with lending markets through smart contracts.
What AAVE is used for
AAVE is the token connected to the Aave ecosystem. It may be involved in governance and protocol-related functions depending on current system rules.
Risks in DeFi lending
Borrowing against volatile crypto can lead to liquidation if collateral value falls. Users also face smart contract risk, oracle risk, changing interest rates, and market liquidity issues.
Aave is one of the best-known examples of how DeFi tries to recreate lending without a traditional bank as the central operator.