Aave

Aave is an Ethereum-based, open-source, non-custodial protocol for users to take out loans and earn interest on deposits on a number of cryptocurrencies. The protocol creates ERC20-compliant tokens at a 1:1 ratio to supplied assets, and interest is immediately compounded to be redirected to any address. Additionally, Aave offers “flash loans,” which are trustless, uncollateralized loans where borrowing and repayment occur within the same transaction. The protocol operates as a DAO where holders of its native token AAVE can propose improvements, integrations, and partnerships on its governance forums to be voted on by other token holders on a majority basis. As of May 2022, Aave had USD 14.5 billion in total value locked (TVL).

In July 2022, Aave proposed a new native, collateral backed stablecoin (pegged to the USD) named GHO, to its DAO. The proposal stated that GHO would be created by users, and backed by a “diversified set of crypto-assets chosen at the users’ discretion.” The protocol went on to launch the third version of its platform following a governance proposal in January 2023. Dubbed “Aave v3”, the upgrade aims to reduce user risk and improve capital efficiency when staking or borrowing correlated assets, such as stablecoins and liquid-staking derivatives via a “High Efficiency Mode”. The feature enables users to increase the highest borrowing power for correlated assets by leveraging larger amounts of assets, such as wstETH, and reduces gas costs across all functions by 20%-25%.

In November 2023, the company acquired Los Feliz Engineering, the creators of Ethereum-based crypto wallet Family, for an undisclosed sum. With this acquisition, the company aimed to facilitate users entering the Web3 ecosystem.

Key customers and partnerships

Aave entered into a partnership with cryptocurrency service provider Fireblocks in July 2021 to launch a permissioned version of its platform called Aave Pro for institutional investors. Aave Pro assets include Bitcoin, Ethereum, Aave, and USD Coin, and its pools are segregated from Aave’s other deployments. The platform configures its v2 smart contracts to ensure that only “institutions, corporates, and FinTechs” that have been whitelisted through Fireblocks’ know-your-customer (KYC) verification can access it. Fireblocks was to also support the launch by implementing anti-money laundering (AML) and fraud controls. 

Funding and financials

In October 2020, Aave raised USD 25 million in a venture capital investment round led by Blockchain.com to extend the project’s reach in the institutional finance space as well as grow its employee base to serve growth in Asian markets.