Aave Protocol is an open-source, decentralized finance platform that enables users to lend and borrow cryptocurrencies. Launched in 2020, it allows individuals to earn interest on deposited assets or take out loans against their crypto holdings.

Users can supply various tokens to liquidity pools, which then become available for others to borrow. Lenders earn interest while borrowers pay interest for the usage of the funds. The interest rates fluctuate based on supply and demand within the platform.

One notable feature of Aave is its use of “flash loans.” These are uncollateralized loans that must be repaid within a single transaction. This allows users to borrow large amounts without upfront collateral, useful for various trading strategies.

Aave also supports different types of collateral and offers stable and variable borrowing rates. It operates on the Ethereum blockchain and has gained popularity due to its user-friendly interface and robust community. Overall, Aave aims to provide a more flexible and accessible lending experience for users.