What Is Aave? Inside the DeFi Lending Protocol

[Markuri33]

DeFi protocol Aave is one of the largest lenders of cryptocurrency and its AAVE token has a larger market cap than rivals Maker or Compound. Here's how it works.Traditionally, to get a loan, you'd need to go to a bank or other financial institution with lots of liquid cash. The bank will ask for collateral—in the case of a car loan, that would be the car title itself—in exchange for the loan. You then pay the principal to the bank every month, plus interest.

DeFi is different. There is no bank. Instead, smart contracts (which are computer codes that automate transactions, such as selling if a token price reaches a certain threshold) do the heavy lifting. DeFi removes the middlemen from asset-trading, futures contracts, and savings accounts.source