Aave (AAVE)

Tokenomics & Utility

AAVE is an ERC-20 token that originated on Ethereum. Its established total supply is 16 million tokens. During the move from the earlier LEND token, holders could exchange 100 LEND for one AAVE. Of the 16 million AAVE, 13 million were designated for that conversion and 3 million for the Aave Ecosystem Reserve. The reserve supports activities approved through governance. (aave.com)

Governance is the token’s central use. AAVE holders can vote on proposals or delegate their voting power to someone else. Voting covers matters such as protocol deployments, features, and market settings. Voting power can also be held through certain forms of AAVE used within the protocol, including staked AAVE and aAAVE on Ethereum. (aave.com)

AAVE can be staked in Aave’s legacy Safety Module. Staked tokens act as a backstop for certain shortfalls, and participants receive incentives under that module’s rules. Aave has since introduced Umbrella, an updated coverage system built mainly around staking deposit tokens, called aTokens, and GHO. The older AAVE staking option and Umbrella therefore have different roles within the protocol’s coverage design. The Aave DAO also runs a program that buys AAVE using protocol revenue and places acquired tokens in its Ecosystem Reserve for governance-approved uses. (aave.com)