Aave

Aave’s predecessor was ETHLend, a decentralized lending marketplace built on Ethereum that let lenders and borrowers around the world create peer-to-peer lending agreements directly through smart contracts, with borrowers using ERC-20 tokens or Ethereum Name Service (ENS) domains as collateral. In 2017, ETHLend sold the LEND token, raising $16 million to build a decentralized lending protocol; LEND was then designed to give holders a discounted price for using the lending platform and to reward active users through buybacks and airdrops.⁠[1][1][2][1][1]

In 2020, the Aave Protocol was launched by the team that had previously developed ETHLend. The V1 whitepaper, released in January 2020, describes the protocol’s shift from ETHLend-style peer-to-peer lending to a pool-based model: lenders deposit crypto assets into pool contracts, and borrowers borrow from the same pools on an overcollateralized basis, so loans do not need to be individually matched; interest rates are set algorithmically based on the funds available in the pool. V1’s LendingPool contract supported deposit, borrow, rate swap, flash loan, redeem, repay, and liquidation, and tokenized deposit positions.⁠[3][4][4][4][4][4][4][4]

On September 11, 2020, a community “soft proposal” for migrating LEND to the AAVE token went live on Aave’s signaling platform; this was the step before the final phase of the migration, and if the community supported it, a formal Aave Improvement Proposal (AIP) would be submitted to complete the migration. The LEND-to-AAVE migration contract remained open for about five years; in September 2025, a governance proposal suggested closing the migration on December 31, 2025, and returning the remaining AAVE in the contract to the DAO.⁠[5][5][6][6][6]

The V2 whitepaper, released in December 2020, states that V2 was developed mainly to improve sub-optimal solutions in V1, including the inability to upgrade aTokens, gas inefficiency, and the need to simplify the architecture and code; V2 added debt tokenization (borrowers’ debt represented by tokens rather than internal accounting within the contract), simultaneous borrows with variable and multiple stable rates, Flash Loans V2, collateral trading, repayment with collateral, and native credit delegation.⁠[7][7][7][7][7][7][7][7][7][7][7]

On October 4, 2021, following a community vote, Aave was deployed on the Avalanche C-Chain, launching in tandem with the Avalanche FoundationAvalanche FoundationThe Avalanche Foundation is a nonprofit organization that supports the ecosystem of the Avalanche public blockchain, promoting the network’s development and adoption through grants, seed investments, liquidity incentives, and AVAX token transactions; it is a separate entity from the development company Ava Labs.Open the full entry’s Avalanche Rush incentive program, under which the foundation distributed AVAX rewards to Aave users; the Avalanche market quickly became Aave’s largest after Ethereum.⁠[8][8][8][8][8]

On January 27, 2022, Aave developers Emilio Frangella and Lasse Herskind published the V3 technical paper, proposing improvements in four areas: capital efficiency, protocol safety, decentralization, and user experience. New features included Portal, which lets assets flow between Aave markets on different networks; High Efficiency Mode (E-Mode), which gives borrowers higher borrowing power when collateral and borrowed assets are correlated; and Isolation Mode, which lets governance list new assets as “isolated” to limit their risk exposure. The paper states that the protocol’s liquidity had peaked at $30 billion. That same year, Avalanche became one of the early networks to run Aave V3.⁠[9][9][9][9][9][9][9][9][10]

On June 6, 2023, Aave LabsAave LabsAave Labs is the original author and contributor to the decentralized lending protocol Aave, founded and led as CEO by Stani Kulechov. It builds products including the aave.com interface, the Aave mobile app, Aave Pro, and the institutional market Aave Horizon, but says it does not control or operate any version of the Aave Protocol.Open the full entry proposed on the governance forum (an ARFC) to launch GHO, an Aave-native stablecoin, on Ethereum mainnet, with the Aave V3 Ethereum pool and the FlashMinter as initial facilitators; 100% of the interest paid on GHO borrows would go to the Aave DAO treasury, and the rate could be adjusted by governance. The corresponding on-chain AIP opened for voting on July 11, 2023. GHO is an overcollateralized asset native to the Aave Protocol and pegged to the U.S. dollar; as of October 2026, users can borrow GHO against any collateral asset available in the Aave V3 Ethereum market.⁠[11][11][11][11][12][12]

On March 20, 2025, BGD Labs, the DAO’s development service provider, proposed activating Umbrella: instead of staking AAVE and stkABPT, users stake aTokens such as aUSDC and aUSDT to earn rewards, and when the protocol incurs bad debt, the corresponding staked assets are automatically burned to cover the shortfall, with no governance intervention needed for slashing decisions. Umbrella was initially deployed on Ethereum, supporting staking of USDC, USDT, WETH, and GHO.⁠[13][13][14][14]

On August 26, 2025, Aave Labs launched the Horizon market on Ethereum, built on Aave Protocol version 3.3: qualified institutional investors who meet issuers’ requirements can borrow stablecoins against tokenized real-world assets, while anyone can permissionlessly supply RLUSD, USDC, or GHO to earn yield. At launch it supported collateral from Circle, Superstate, and Centrifuge, and its network also included Chainlink, Ripple, Securitize, VanEck, WisdomTree, and others. By the end of 2025, Horizon had more than $570 million in deposits.⁠[15][15][15][15][15][16]

On November 19, 2025, the Aave V4 testnet went live and its codebase was released for public review. V4 introduced a “Hub and Spoke” architecture: liquidity is held centrally in Liquidity Hubs, and Spokes connect to them with their own collateral types, risk parameters, and liquidation rules, so capital on the same chain is no longer fragmented across markets; V4 also introduced risk premiums priced by collateral quality and a new liquidation engine.⁠[17][18][17][17][16]

On December 4, 2025, Aave Labs announced a partnership with CoW Swap, under which every swap feature on aave.com would run through CoW Protocol, replacing the Paraswap swap adapters used since the V2 and V3 era. On December 11, an Orbit delegate and AAVE holder published an open letter on the governance forum questioning extra fees of 15 to 25 basis points charged by the new integration, and said test transactions showed that these fees no longer flowed to the Aave DAO treasury, whereas Paraswap referral fees had previously been redirected to the DAO.⁠[19][19][20][20][20][20][20]

On December 16, BGD Labs co-founder Ernesto Boado submitted an ARFC requesting that Aave brand assets such as domains, social handles, and naming rights be held by a DAO-controlled vehicle with anti-capture protections, and that any party currently controlling those assets hand them over. The proposal went to a Snapshot vote from December 23 to 26, receiving about 63,000 votes in favor, about 995,000 against, and about 742,000 abstentions, with votes against in the majority.⁠[21][21][21][22]

On February 12, 2026, Aave Labs proposed the “Aave Will Win” framework on the governance forum, asking the DAO to approve directing 100% of revenue from Aave-branded products to the Aave DAO treasury, committing to a solution for protecting the Aave brand, ratifying Aave V4 as the protocol’s core technical foundation for future development, and creating a framework for the DAO to fund strategic growth and development. Aave Labs wrote in the proposal that, apart from protocol development and marketing, it had self-funded the product layer, including aave.com, the mobile app, Aave Pro, and Horizon, as well as legal and compliance work.⁠[2][2][2][2][2][2]

The framework’s temperature check was voted on from February 25 to 28, with about 622,000 votes in favor and about 497,000 against; the formal ARFC was voted on from April 1 to 4, with about 728,000 votes in favor and about 174,000 against.⁠[22][22]

From March 20 to 23, 2026, the ARFC to activate Aave V4 on Ethereum mainnet went to a Snapshot vote, receiving about 645,000 votes in favor and less than one vote against. On March 30, V4 went live on Ethereum mainnet with an initial three Liquidity Hubs, with Aave Pro as the dedicated interface surfacing all Hubs and Spokes.⁠[22][18][18][18]

On July 15, 2026, V4 went live on Avalanche, its first multi-chain deployment, with one Core Liquidity Hub and a Main market, an AVAX Correlated market, and a Forex (stablecoin) market. Since Aave first arrived on Avalanche with V2 in 2021, its V2 and V3 deployments on the network have processed more than $15 billion in all-time cumulative inflows.⁠[10][10][10][10]

The Aave Protocol is a set of publicly accessible, self-executing smart contracts with which users interact directly through self-custodial wallets, without intermediaries. Depositors who supply tokens to a pool receive corresponding aTokens (such as aETH and aUSDC), whose balances grow automatically as interest accrues; interest rates float with the pool’s utilization rate, rising when utilization is high to attract supply and discourage borrowing. Borrowing must be overcollateralized, with borrowing capacity determined by each collateral asset’s loan-to-value (LTV) ratio; when a position falls below the liquidation threshold, anyone can act as a liquidator, repaying the debt and receiving part of the collateral at a discount.⁠[23][23][23][23][23][23][23][23][23][23][23]

As of October 2026, V3 is deployed on networks including Ethereum, Polygon, Avalanche, and BNB Chain, as well as layer-2 networks including Base, Arbitrum, and Optimism.⁠[23]

The protocol is governed by the Aave community: members holding AAVE, stkAAVE, or aAAVE can vote themselves or delegate their voting power to delegates; the DAO engages service providers including Chaos Labs and Llamarisk (risk), Karpatkey and Tokenlogic (finance), Certora (security), BGD Labs (development), and ACI (growth); a Guardian multisig whose signers are elected by the community can execute limited emergency protections, and the governance Guardian can veto on-chain proposals deemed malicious.⁠[24][24][24][24]

Aave Labs is the original author of and a contributor to the protocol, founded and led as CEO by Stani Kulechov, but the company says it does not control or operate any version of the Aave Protocol on any blockchain. Aave Labs separately develops products such as the aave.com interface, the Aave mobile app, Aave Pro, and Aave Horizon; in October 2025 it acquired San Francisco-based fintech company Stable Finance, and in November 2025 its subsidiary Push Virtual Assets Ireland Limited received Crypto-Asset Service Provider authorization from the Central Bank of Ireland under the EU’s Markets in Crypto-Assets Regulation, an authorization that applies solely to fiat-to-stablecoin on- and off-ramp services.⁠[3][25][3][3][2][25][26][26]

Aave Labs wrote in its year-in-review in January 2026 that protocol deposits peaked at $75 billion in 2025 and ended the year at $55 billion, up 57% from the start of the year; all-time assets supplied exceeded $3 trillion and all-time loans created reached $950 billion; and over the year the protocol handled more than $1.1 billion in liquidations across more than 100,000 events. Total GHO supply grew to nearly $500 million in 2025; savings GHO (sGHO), launched in July with yield funded by protocol revenue, accounted for more than 54% of circulating GHO by year-end.⁠[16][16][16][16][16][16][16]

Aave: Official website: https://aave.com/ (opens in a new window).⁠[3]

Aave Governance Forum: Official website: https://governance.aave.com/ (opens in a new window).⁠[21]

X: Public account: https://x.com/aave (opens in a new window)⁠[27]