Aave DeFi: Everything You Need to Know

When you hear Aave DeFi Aave, a decentralized lending and borrowing platform built on Ethereum. Also called Aave Protocol, it lets users supply assets to earn interest or borrow against collateral without a middle‑man. The protocol’s flash loans, rate‑switching, and credit delegation features make it a core building block for many other DeFi services.

One of Aave’s most direct competitors is Compound, a money‑market protocol that also offers algorithmic interest rates. While both platforms let you earn yields on supplied tokens, Compound uses a cToken model that represents your stake, whereas Aave issues aTokens that accrue interest directly in your wallet. This difference influences how users interact with each system, especially when they want to move funds quickly or integrate with other smart contracts.

Yield farming, the practice of moving crypto assets across DeFi protocols to chase the highest APY often starts with Aave’s liquidity pools. Farmers deposit stablecoins into Aave, receive aTokens, and then lock those aTokens into farm contracts on other platforms. The extra layer of reward tokens—often governance or utility tokens—creates a compounding effect that can dwarf the base interest from Aave alone. Understanding how Aave’s variable and stable rates feed into these strategies is key to avoiding hidden losses.

Liquidity mining, incentivized provision of liquidity to a protocol in exchange for native tokens works hand‑in‑hand with Aave. When a new market launches on Aave, the team may distribute AAVE tokens to early liquidity providers, turning ordinary borrowers into token earners. This mechanism not only boosts TVL (total value locked) but also aligns the interests of users and developers. Pairing liquidity mining with yield farming creates a feedback loop: more AAVE rewards attract more capital, which in turn raises the protocol’s borrowing capacity and revenue.

All these pieces—Aave’s core lending engine, the competition from Compound, the extra earnings from yield farming, and the boost from liquidity mining—form a tightly knit DeFi ecosystem. Below you’ll find a curated set of guides, comparisons, and how‑to articles that break down each element, show real‑world examples, and give you actionable steps to start or improve your own DeFi strategy. Ready to dive deeper? Explore the articles that follow and turn these concepts into profitable moves.