{"id":7088,"date":"2025-05-22T10:57:13","date_gmt":"2025-05-22T09:57:13","guid":{"rendered":"https:\/\/investx.fr\/en\/?p=7088"},"modified":"2025-05-22T10:57:16","modified_gmt":"2025-05-22T09:57:16","slug":"aave-aave-how-works-price-buy","status":"publish","type":"post","link":"https:\/\/preprod.investx.fr\/en\/learn\/crypto\/aave\/","title":{"rendered":"AAVE : What It Is, How It Works, and Why It Matters in 2026"},"content":{"rendered":"\n
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What is AAVE ?<\/h2>\n\n\n\n

AAVE is a native cryptocurrency<\/strong> of the decentralized finance protocol of the same name. This protocol, which ranks among the leaders in the DeFi<\/strong> ecosystem, allows users to borrow and lend digital assets without going through traditional intermediaries like banks. The name “Aave” comes from Finnish and means “ghost<\/strong>“, perfectly symbolizing the transparent and non-custodial nature of the protocol.<\/p>\n\n\n

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\"AAVE<\/figure>\n<\/div>\n\n\n

The AAVE token plays a fundamental role in the Aave ecosystem. It serves both as a governance token<\/strong>, allowing holders to vote on the protocol’s evolution, and as a utility token<\/strong> offering benefits such as reduced transaction fees. Users can also stake<\/strong> their tokens in the “Safety Module<\/strong>” to secure the protocol and receive rewards in return.<\/p>\n\n\n\n

The protocol operates through liquidity pools<\/strong> where users can deposit their cryptocurrencies to lend to others. In exchange for their deposits, lenders receive aTokens<\/strong>, which automatically generate interest over time. This system allows for great flexibility and efficiency in allocating financial resources.<\/p>\n\n\n\n

One of Aave’s major innovations is the concept of Flash Loans<\/strong>, which allows borrowing assets without collateral provided that the loan is repaid within the same blockchain transaction<\/strong>. This feature has paved the way for new arbitrage strategies and financial optimization in the crypto<\/a><\/strong> universe.<\/p>\n\n\n\n

The history of AAVE<\/h3>\n\n\n\n

The token’s history begins in 2017, when the project was launched under the name ETHLend<\/strong> by Stani Kulechov<\/strong>, then a law student. ETHLend was a peer-to-peer lending platform based on Ethereum<\/a><\/strong>.<\/p>\n\n\n

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\"Histoire<\/figure>\n<\/div>\n\n\n

In 2018, faced with the limitations of the peer-to-peer model, the team decided to pivot towards a more efficient liquidity pool system<\/strong>. This change was accompanied by a rebranding in 2019, and ETHLend officially became Aave<\/strong>.<\/p>\n\n\n\n

The launch of version 1 of the Aave protocol<\/strong> took place in January 2020, introducing variable and stable interest rates<\/strong> as well as Flash Loans<\/strong>. In December 2020, Aave V2<\/strong> was deployed, bringing significant improvements such as credit delegation<\/strong> and gas cost optimization<\/strong>.<\/p>\n\n\n\n

The year 2021 marked Aave’s expansion to other blockchains with deployments on Polygon<\/strong> and Avalanche<\/a><\/strong>, making the protocol more accessible. In March 2023, Aave V3<\/strong> was launched, introducing advanced features such as Portal<\/strong> for cross-chain transfers and Isolation Mode<\/strong> for testing new assets with limited risks.<\/p>\n\n\n\n

Who created AAVE ?<\/h3>\n\n\n\n

Stani Kulechov<\/strong> is the founder and CEO of Aave. Born in Finland, he began to take an interest in cryptocurrencies and blockchain while still a law student at the University of Helsinki. His vision of a more open and accessible financial system led him to create ETHLend in 2017, which would later become Aave.<\/p>\n\n\n

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\"Cr\u00e9ateur<\/figure>\n<\/div>\n\n\n

Kulechov is recognized as one of the pioneers of DeFi<\/strong>. His deep understanding of legal and financial issues, combined with an innovative vision of blockchain<\/a><\/strong> technology, has allowed him to develop a protocol that meets the real needs of users while respecting the fundamental principles of decentralization.<\/p>\n\n\n\n

Under his leadership, the Aave team has navigated the turbulent waters of the crypto market<\/strong>, surviving the 2018-2019 “crypto winter” and turning challenges into opportunities. Kulechov has also played a crucial role in the transition to decentralized governance<\/strong> of the protocol, allowing the community to gradually take control of important decisions.<\/p>\n\n\n\n

Beyond Aave, Stani Kulechov is a serial entrepreneur<\/strong> in the Web3 ecosystem. He notably launched Lens Protocol<\/strong>, a decentralized blockchain-based social network, demonstrating his continued commitment to decentralization beyond the financial sector<\/strong>.<\/p>\n\n\n\n

What is AAVE cryptocurrency used for ?<\/h2>\n\n\n\n

The AAVE token is at the heart of the Aave ecosystem and fulfills several essential functions that contribute to the stability, security, and evolution of the protocol.<\/p>\n\n\n\n

Governance<\/strong> constitutes one of the main utilities of the AAVE token. Holders can actively participate in decisions regarding the future of the protocol via Aave’s decentralized governance<\/strong> system. Each token represents a voting right, allowing its owner to express opinions on proposals ranging from technical parameter adjustments to the integration of new features or assets.<\/p>\n\n\n

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\"AAVE<\/figure>\n<\/div>\n\n\n

Staking<\/strong> represents another major use of the token. Users can lock their tokens in the Safety Module<\/strong>, a security mechanism designed to protect the protocol against potential failures. In the event of an unforeseen event affecting the system’s solvency, staked tokens can be used to cover losses. In return for this risk-taking, stakers receive regular rewards<\/strong> in AAVE tokens.<\/p>\n\n\n\n

The AAVE token also offers economic benefits<\/strong> to its holders when they use the protocol. These benefits include reduced transaction<\/strong> and borrowing fees, as well as the possibility of borrowing without fees under certain conditions.<\/p>\n\n\n\n

As collateral<\/strong>, the token can be deposited on the platform to borrow other cryptocurrencies. Its value as collateral is particularly interesting because it benefits from an advantageous collateralization factor<\/strong>, allowing users to optimize their capital.<\/p>\n\n\n\n

Finally, the AAVE token serves as a store of value<\/strong> within the DeFi ecosystem. Its limited distribution to 16 million tokens<\/strong> and its fundamental utility in a major protocol make it an asset sought after by investors and users of decentralized finance<\/strong>.<\/p>\n\n\n\n

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Which blockchain does AAVE run on ?<\/h2>\n\n\n\n

AAVE primarily operates on the Ethereum blockchain<\/strong>, which constitutes the original foundation of the protocol. Ethereum, as the reference platform for decentralized applications, offers Aave a mature ecosystem and robust security. The Aave protocol was initially designed to leverage Ethereum’s smart contracts<\/strong>, enabling the automation of loans and borrowing without intermediaries.<\/p>\n\n\n

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\"AAVE<\/figure>\n<\/div>\n\n\n

However, faced with Ethereum’s limitations in terms of scalability<\/strong> and transaction costs<\/strong> (sometimes prohibitive gas fees), Aave has adopted a multi-chain<\/strong> strategy to improve the accessibility and efficiency of the protocol. This approach allows users to choose the blockchain that best meets their needs in terms of costs, speed, and security.<\/p>\n\n\n\n

Polygon<\/strong> (formerly Matic Network) was one of the first scaling solutions adopted by Aave. This layer 2 solution<\/strong> for Ethereum offers much faster and less expensive transactions while maintaining a secure connection with Ethereum’s main blockchain.<\/p>\n\n\n\n

Avalanche<\/strong> is another important blockchain on which Aave is deployed. Recognized for its high performance<\/strong> and low latency<\/strong>, Avalanche offers a viable alternative to Ethereum for users seeking fast transactions.<\/p>\n\n\n\n

Arbitrum<\/strong> and Optimism<\/strong>, two optimistic rollup solutions for Ethereum, also host versions of the Aave protocol. These layer 2 solutions significantly reduce transaction fees while inheriting Ethereum’s security. And more recently, Aave has even expanded to Base<\/strong>, a new scaling solution developed by Coinbase<\/strong>.<\/p>\n\n\n\n

The protocol uses cross-chain bridges<\/strong> to facilitate the transfer of assets between these different blockchains. This interoperability is essential to maintain liquidity and allow users to easily migrate their assets to the blockchain offering the best conditions at any given time.<\/p>\n\n\n\n

Despite this diversification, Ethereum remains the main blockchain for Aave, particularly for protocol governance<\/strong> which takes place exclusively via the Ethereum chain.<\/p>\n\n\n\n

Advantages and disadvantages of AAVE<\/h2>\n\n\n\n

Let’s now look at the main advantages and areas for improvement of the project.<\/p>\n\n\n\n

Advantages<\/h3>\n\n\n\n