Overview
Aave is the largest DeFi lending protocol, enabling permissionless supply and borrow of crypto assets. Supply assets to earn yield. Borrow against your crypto collateral without a credit check. Famous for inventing flash loans — uncollateralized loans repaid within a single transaction block.
Pricing
✅ When to use
- Earning yield on stablecoins (USDC, USDT) without selling — typically 3-8% APY
- Borrowing stablecoins against crypto collateral to access liquidity without a taxable sale event
- Flash loans for arbitrage, collateral swaps, or liquidations in a single transaction
- GHO stablecoin strategies — Aave's native stablecoin with discounted rates for stkAAVE holders
❌ When NOT to use
- Borrowing at high LTV ratios with volatile collateral — liquidation risk is real and fast
- Beginners unfamiliar with health factors, liquidation mechanics, and collateral ratios
- When you need simple stablecoin yield — compare rates with Compound and Morpho first
💡 Personal Tips
Aave's health factor is the most critical number when borrowing — keep it above 1.5 to survive market volatility without liquidation. E-Mode is massively underused: if you're doing ETH/stETH or USDC/USDT strategies, E-Mode allows much higher LTV because the assets are correlated. For yield optimization, check Morpho (built on top of Aave/Compound) which often offers higher supply rates by aggregating liquidity. Always monitor your positions during high-volatility market events — a 30% drop can take a 75% LTV position to liquidation.