What is Aave? (AAVE)

Founding and Early Development (2017–2019)

Aave was founded by Stani Kulechov as ETHLend in 2017, pioneering decentralized lending before rebranding to Aave in 2018, laying the groundwork for DeFi innovation.

Key Events:

• 2017: ETHLend launches as a decentralized peer-to-peer lending platform on Ethereum.
• 2018: ETHLend rebrands to Aave, shifting focus to liquidity pool-based lending.
• Initial development of the AAVE token and governance structure.

Aave v1 and DeFi Emergence (2020)

Aave launches v1, introduces flash loans and liquidity pools, quickly establishing itself as a leading DeFi protocol with innovative lending features.

Key Events:

• 2020 Jan: Aave v1 launches, pioneering features like flash loans and rate switching.
• Rapid growth in total value locked (TVL) due to DeFi boom.
• Establishment of Aave as a top lending protocol in DeFi.

Expansion and Governance (2020–2021)

Aave decentralizes through DAO governance, launches AAVE token migration, and expands to multiple blockchain networks, solidifying its leadership in DeFi.

Key Events:

• 2020: Launch of AAVE token migration and governance DAO.
• Expansion to Polygon and Avalanche for multi-chain support.
• Introduction of Aave v2 with improved user experience and risk management.

Real-World Asset Integration and Institutional Adoption (2022–2023)

Aave integrates real-world assets (RWAs) and partners with institutions, focusing on compliance and bridging traditional finance with DeFi.

Key Events:

• Launch of Aave Arc, a permissioned DeFi market for institutions.
• Partnerships with fintech and RWA providers.
• Development of new collateral types and KYC/AML compliant offerings.

Regulatory Navigation and Product Diversification (2024–2025)

Aave expands into consumer savings apps, secures MiCA approval in Europe, and resolves regulatory scrutiny, positioning itself for mainstream adoption.

Key Events:

• 2025 Nov: Launch of retail savings app with up to 9% APY, integrating banking and stablecoin deposits.
• 2025 Nov: MiCA approval in Europe, enabling zero-fee stablecoin ramps and compliant fiat on-ramps.
• 2025 Dec: SEC ends four-year probe into Aave with no enforcement action.
• 2025 Nov: Launch of Aave ETPs and inclusion in major crypto investment products.
• Integration with Securitize and VanEck's VBILL tokenized treasury fund on Aave's Horizon market.

Governance Challenges and Strategic Vision (Late 2025–2026)

Aave faces governance disputes and backlash, prompting founder Stani Kulechov to propose a transformative 'master plan' for Aave's future, aiming beyond lending.

Key Events:

• 2025 Dec: Governance vote sparks backlash over process and escalation.
• 2025 Dec: Dispute between Aave DAO and Aave Labs over CoW Swap fees.
• 2025 Dec: Ongoing debates about governance and protocol direction.
• 2026 Jan: Stani Kulechov announces new vision to expand Aave beyond DeFi lending.
• 2026: Master plan targets scalability (v4 Hub and Spoke), $1B in RWAs, and further app expansion.

Aave is a leading DeFi protocol enabling decentralized lending and borrowing, with robust governance and evolving tokenomics. Learn about Aave’s features, token utility, and recent platform developments.

Genesis and Early Development (2017-2020)

Summary: Aave began as ETHLend, evolving into a decentralized lending platform with innovative features like flash loans and overcollateralized borrowing.

• Launched in 2017 as ETHLend, Aave rebranded in 2020 to introduce a more sophisticated DeFi protocol.
• Pioneered flash loans, allowing users to borrow instantly with no collateral, provided repayment occurs within one transaction block.
• Enabled overcollateralized borrowing, allowing users to deposit crypto assets and borrow other assets against them.
• Established robust risk management and transparent on-chain governance through the AAVE token.

Growth and Institutional Integration (2021-2025)

Summary: Aave expanded its offerings to include real-world assets, institutional-grade products, and retail savings apps, reinforcing its position in DeFi.

• Launched new markets such as Aave Arc for institutional compliance and Aave Horizon for real-world asset (RWA) integration (source).
• Rolled out a retail savings app with up to 9% APY, competing directly with traditional banks (source).
• Expanded mobile app support, facilitating seamless access to decentralized lending and borrowing.
• Received regulatory approval under MiCA, allowing zero-fee stablecoin ramps in Europe (source).

Governance, Innovation, and Future Plans (2025-2026 and Beyond)

Summary: Aave’s governance faced challenges, but the founder proposed an ambitious master plan to expand beyond DeFi lending and enhance value for tokenholders.

• Recent governance votes revealed flaws in DAO processes, prompting community debate and calls for improvement (source).
• Founder Stani Kulechov pitched a plan to expand Aave beyond DeFi lending, aiming for $1 billion in RWAs and a new Hub and Spoke architecture (source).
• SEC concluded a four-year probe with no enforcement action, signaling regulatory clarity for the protocol (source).
• Aave’s tokenomics continue to evolve, with the AAVE token used for governance, staking, and as a value capture mechanism within the protocol.

Tokenomics and Core Characteristics

Summary: AAVE token powers governance, staking, and protocol safety, with utility expanding as Aave integrates new products and compliance standards.

• AAVE is an ERC-20 token, essential for protocol governance and voting on proposals (Aave documentation).
• Staking AAVE enhances protocol safety via the Safety Module, providing insurance against shortfall events.
• Token utility includes fee discounts, protocol incentives, and collateral for borrowing.
• AAVE’s supply is capped, with mechanisms for burning and rewards distribution to active participants.
• AAVE price and performance are tracked on major exchanges (crypto.com price page).