The information about the Aave (AAVE) token is as follows: AAVE is the native token of the Aave protocol, a decentralized finance (DeFi) platform built on the Ethereum blockchain. Launched initially as ETHLend in November 2017 by founder Stani Kulechov, the platform rebranded to Aave in September 2018 to expand its offerings beyond simple lending. The AAVE token itself was introduced in October 2020 following a token swap from the original LEND token at a ratio of 1:100, creating a total supply of 16 million AAVE tokens, with 3 million held in reserve. Aave operates as an open-source, non-custodial liquidity protocol, enabling users to lend and borrow a variety of cryptocurrencies by leveraging liquidity pools and smart contracts. The protocol supports around 20 different assets, including stablecoins like USDC and DAI, as well as other ERC-20 tokens.

AAVE serves multiple purposes within the ecosystem. Primarily, it functions as a governance token, allowing holders to vote on Aave Improvement Proposals (AIPs) to influence the protocol’s development, such as deciding which assets are listed or adjusting risk parameters. Additionally, AAVE can be staked in the protocol’s Safety Module, where it acts as a backstop to protect against shortfall events—situations where liquidity is insufficient to cover lenders’ funds—offering stakers rewards in return. The protocol also introduced innovative features like flash loans, which allow borrowing without collateral, provided the loan is repaid within the same Ethereum transaction, making it a tool popular among developers for arbitrage and other strategies.

Aave’s smart contracts are publicly accessible, audited, and formally verified by third parties to enhance security, though no protocol is entirely risk-free. It is designed for integration into various products and services, supporting deployment on Ethereum and other EVM-compatible networks like Polygon and Avalanche. The AAVE token also provides holders with discounted fees on the platform. The name "Aave," meaning "ghost" in Finnish, reflects its aim to be a transparent and open infrastructure in DeFi. Posts on X and web sources highlight its significance as a leading DeFi protocol, emphasizing its multi-pool structure and community-driven governance model led by AAVE token holders.