Aave protocol is a "decentralized, open-source, and non-custodial money market protocol".<br />
Depositors earn interest by providing liquidity to lending pools, while borrowers can obtain overcollateralized loans by using the liquidity from these pools.<br />
Similar to other DeFi platforms (e.g., Compound, Fulcrum), deposits are tokenized as aTokens, which accrue interest in real-time. Aave Protocol supports more than 15 different assets, with a large selection of stablecoins.<br />
LEND tokens are used for fee reductions and will also be used for governance rights at the protocol level for future smart-contract updates. LEND tokens are also burnt from the fees collected from the Aave Protocol.<br />
Since January 2020, Aave protocol also offers undercollateralized solutions: flash loans allow developers to borrow instantly and easily without any collateral.