Aave

Aave is a decentralized money market protocol where users can lend and borrow cryptocurrency across 20 different assets as collateral. Lenders earn interest by providing liquidity to the market, while borrowers collateralise their cryptoassets to take out loans from the liquidity pools.

The protocol has a native token called AAVE, which is also a governance token that lets the community decide the direction of the protocol in a collective manner. Aave sits across several DeFi categories, including lending and borrowing, yield farming, stablecoin issuance and governance.

Aave pools user deposits into liquidity markets. Lenders supply assets and receive interest, while borrowers post collateral and draw loans from those pools. The protocol manages collateral ratios and liquidation mechanics to keep loans over-collateralised.

AAVE token holders participate in governance, voting on protocol parameters, asset listings and other changes. The token therefore serves both as a coordination mechanism and as a claim on the protocol's direction.

AAVE has a circulating supply of 15,422,794 tokens out of a total and maximum supply of 16,000,000. The fixed cap means no additional tokens can be minted beyond the remaining allocation.

The token functions primarily as a governance asset, letting holders vote on protocol decisions. Its value is tied to the protocol's usage, fee generation and the community's ability to coordinate on upgrades and risk parameters.

Aave's disclosed funding totals $48.7M across four rounds. The project raised $16.2M in a 2017 ICO, followed by a $3M private token sale in 2020 with Framework Ventures and 3AC, a $25M strategic round in 2020 with Blockchain Capital, Blockchain.com Ventures and Standard Crypto, and a $4.5M private token sale in 2020 with ParaFi Capital.

This funding history spans multiple years and investor groups, reflecting sustained interest in the protocol through different market conditions.

Aave's main edge is its entrenched liquidity and multi-chain presence. With $14.82B in TVL, it is one of the deepest money markets in DeFi, which creates a network effect: lenders go where borrowers are, and borrowers go where liquidity is deepest.

The fixed supply of AAVE also distinguishes it from protocols with inflationary token emissions. Governance control over a capped token gives holders a direct stake in protocol decisions without the dilution pressure that continuous emissions create.

Aave's depth of liquidity across Ethereum, Avalanche and Polygon makes it a default venue for collateralised borrowing in DeFi, while its capped token supply gives governance participants a non-inflationary stake.