AAVE is an open source, non -hosting currency market platform, which provides a variety of debt -based financial products in a decentralized manner. As a DEFI platform based on Ethereum, AAVE supports ETH, various stablecoins such as DAI and USDC, and a variety of ERC-20 token from decentralized financial ecosystems. The AAVE protocol allows users to earn interest by depositing digital assets into the liquidity pool and providing stable interest rate loans, floating interest rate loans, and Lightning loans. When users deposit tokens into AAVE's liquidity pools, they will get the corresponding amount of ATOKEN, which represents the user -owned generation currency. If users need to borrow, they must provide sufficient mortgage to support loans to ensure the security of funds in the agreement and prevent the value of default or mortgage decline.On AAVE, stable interest rate loans have fixed interest rates, similar to traditional bank loans. The interest rate of floating interest rate loans will be dynamically adjusted according to the supply and demand. Like many DEFI lending platforms, the key to the AAVE market mechanism is sufficient mortgage. As long as there is sufficient mortgage support, stable interest rates and floating interest rate loans can always be open. Lightning Loan is a novel experimental lending mechanism without mortgage, but the loan must be paid off in a single Ethereum block, usually for developers or users with certain technical knowledge.In the AAVE protocol, the management innovative currency market adopts a completely decentralized autonomous organization (DAO) governance model to motivate AAVE token holders to securely manage and develop platforms through voting and mortgage token. AAVE token holders can make suggestions and vote for changes in the platform to jointly manage risks and leverage in the AAVE currency market. Although AAVE was initially launched in 2017, the native LEND tokens were used, the first improvement proposal of DAO to approve the migration to the AAVE tokens, which took effect in September 2020.TokenAAVE uses excess mortgage and clearing systems to manage debt in its system. By depositing tokens into AAVE, you can provide liquidity for AAVE's tokens to trigger ATOKEN's automatic casting. These ERC-20s are linked to the value of basic assets 1: 1, which represent you to provide liquidity rights. ATOKENS will earn interest in real time in your wallet, and interest will fluctuate according to the needs of borrowing and liquidity. Holding ATOKEN allows you to continue to earn interest in depositing assets and can be redeemed at any time. In addition, ATOKEN also gives the holder the right to obtain a certain proportion in AAVE's Flash Loans mechanism.Each atoken is based on a single encryption asset. Users who save ETH into AAVE will get AETH tokens, and users who deposit DAI into AAVE will get ADAI tokens. The interest rates of AETH and ADAIs vary from the loan supply and demand of their respective basic assets. As the utilization rate is close to 100%, insufficient liquidity will become a potential risk, because this may cause system mortgage to be insufficient to pay debts or users to extract mortgage.LiquidationOn the AAVE platform, in addition to Flash loans, loans need to be excessive mortgage, which means that the value of locking mortgages must always be higher than the loan value. For excess mortgage loans, borrowers have the responsibility to ensure that the value of their mortgages will not be far lower than the minimum requirements, otherwise they may face liquidation risks. During the liquidation, some mortgages will automatically sell the debt to repay the debt, and any fine or fee.Although liquidation may be unfavorable for borrowers, it helps ensure the effectiveness of the AAVE platform. It maintains the liquidity of other users by removing non -performing loans and maintains the platform balance. If the liquidation event is not enough to maintain system liquidity, the AAVE tokens locked in the security module will be auctioned on the open market to restore the liquidity of the platform.Security moduleAAVE integrates with other DEFI platforms (such as Uniswap, BALANCER and CURVE) to create new financial products and mechanisms. AAVE's security module is a specified liquidity pool on the Balance platform. AAVE token holders can lock their tokens to obtain more AAVE tokens and participate in the agreement decision voting. The AAVE tokens that are locked in the security module earn costs from the AAVE protocol to ensure its liquidity. It is also the final mortgage liquidity when high -risk operation and asset utilization rate on AAVE.In short, AAVE et al. DEFI protocol provides a new financial ecosystem for the user and token holder community. There is no intermediate person, and users maintain fairness together. Responsible governance and the value provided by actual mortgages together ensure the stability of AAVE's lending system. AAVE's market mechanism relies on excess mortgage to maintain liquidity. Without enough liquidity, there will be no new loans, and the liquidation mechanism will help maintain the balance of the platform. The development of AAVE has an important position in the DEFI ecosystem, which is an important part of decentralized financial innovation.