DeFi
Aave
A DeFi lending protocol: deposit to earn interest, or post collateral and borrow.
Definition
Aave lets users deposit assets to earn interest or post collateral to borrow other assets. Rates float with supply and demand. If your collateral value falls too far, your position is liquidated — so leave a wide margin.
Key points
- Earn interest on deposits
- Borrow against collateral
- Deployed across many chains
How to use
- Connect a wallet
- Choose the asset and amount to supply
- If borrowing, watch the health factor
- Sign to execute
Pros
- Audited with a long operating record
- Transparent rates
Cons
- Liquidation risk
- Smart contract risk never fully goes away
- Gas costs apply
Safety
- · Borrow far below your collateral limit
- · Assume a sharp drop will liquidate you automatically