How Aave Works:
Aave operates as a decentralized money market. Here's a breakdown of its core functionalities:
* Lending: Users can deposit supported cryptocurrencies into Aave's liquidity pools. In return, they receive "aTokens" (e.g., aETH for deposited ETH), which represent their share in the pool and automatically accrue interest. The interest rates are determined by an algorithm based on the supply and demand dynamics within each pool.