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Blockchain LabVENTURE STUDIO

whitepaperCredit and stable value2020

Aave Protocol white paper

Aave. Aave.

Aave's v1 protocol paper: pooled lending with stable and variable rates, and loan features such as rate switching and uncollateralised flash loans inside a single transaction. It sits in the same family as Compound, with a different rate and product surface.

The problem the paper names

A single floating rate does not match every borrower, and some uses of inventory only need the asset for the length of one transaction. Aave's paper adds a choice of rate and a loan that never leaves the transaction that borrowed it.

What the design proposes

  • Suppliers deposit into a reserve and receive a claim.
  • Borrowers choose a rate mode where the protocol offers one. Collateral rules still apply to open loans.
  • A flash loan must be repaid, with its fee, before the transaction ends, or the transaction reverts.

How the mechanism is specified

  • Reserve factors and loan-to-value settings are risk parameters. They are not derived inside the paper from first principles.
  • Flash liquidity is real only while the pool holds the asset. It is not a credit opinion about the borrower, because there is no time in which they hold the asset unsecured.
  • Later Aave versions add risk admins, portals and different token mechanics. Cite the version you mean.

What this page does not treat as proven

  • A flash loan is not a banking licence and not a statement about borrower creditworthiness.
  • Stable-rate modes can still be repriced under the protocol's own rules. 'Stable' is a defined term, not English.
  • This page does not describe liquidity mining or safety-module staking.

Why a venture studio still reads it

Use this paper when a product pitch says 'flash loan' without the revert rule, or 'stable rate' without the clause that lets the rate move. Those clauses are the product.

This is Blockchain Lab's reading of a public design paper. It is not the paper, not a copy of it, and not an offer of tokens, equity, custody or a partnership. Later network behaviour can diverge from the text. Nothing here is investment, legal or technical advice.