Aave: Complete Lending & Borrowing Guide 2026
The #1 DeFi lending protocol · +150 XP · 14 min read · Updated March 2026
What is Aave?
Aave (pronounced "ah-veh," Finnish for "ghost") is the largest decentralized lending and borrowing protocol in DeFi. Users deposit crypto assets to earn interest, or post collateral to borrow other assets at variable or stable interest rates — all governed by smart contracts, no credit checks required.
In 2026, Aave V3 dominates with E-Mode (efficiency mode for correlated assets like stablecoins), isolation mode for new assets, and cross-chain portals for moving liquidity between L1/L2s. Aave also launched GHO — its native overcollateralized stablecoin.
How Lending Works
Current Rates (Example)
| Asset | Supply APY | Borrow APY (Variable) | Max LTV |
|---|---|---|---|
| USDC | 4.2% | 5.8% | 77% |
| ETH | 1.8% | 2.9% | 80% |
| WBTC | 0.6% | 1.4% | 70% |
| DAI | 3.9% | 5.5% | 77% |
| USDT | 4.4% | 6.1% | 77% |
GHO Stablecoin
GHO is Aave's native decentralized stablecoin, pegged to USD. Unlike borrowing USDC, minting GHO generates interest income for the Aave DAO — not external lenders. $AAVE stakers get a discount on GHO borrow rates. GHO is used in Aave's liquidity strategies and earns sGHO yield when staked.