Aave Introduction
Learn how Aave interest rates work, calculate APYs and access live and historical data with Aavescan.
What is Aave?
Aave is a decentralized lending platform that enables users to earn interest on deposits or borrow crypto assets using collateral. Aave lending markets use smart contracts to automatically adjust interest rates based on supply and demand.
Types of Aave Interest Rates
- Deposit (Liquidity Rate): Yield that is earned by depositors.
- Borrow Rate: Interest that borrowers pay.
How Aave Rates Are Determined
Aave interest rates are determined by the utilization rate - the percentage amount of an asset that has been borrowed from the pool. When more is borrowed, rates go up to discourage borrowing and encourage deposits. This system is built into Aave’s smart contracts to keep the market balanced.
Aave Key Terms Explained
- liquidityRate: Annualized depositor yield (APR).
- liquidityIndex: Total depositor yield including extra fees since the inception of the market. The index tracks the accumulation of interest and can be used to calculate the historical interest accrued between two timestamps.
- variableBorrowRate: APR charged to borrowers.
- variableBorrowIndex: Total borrow interest accumulated since the inception of the market. Use this to compare historical interest between two timestamps.
- utilization: Percentage of liquidity currently borrowed. For example if 10 wBTC has been deposited into the lending pool and 8 wBTC has been borrowed then the utilization rate is 80%.
- totalAToken: Total deposited amount.
- variableBorrowDebt: Total borrowed amount at variable rates.
How to Calculate APY from APR
Aave reserve contracts report deposit and borrow rates as APRs (getReserveData). Convert APR to APY:
rateApr = rate / 10^27
rateApy = ((1 + (rateApr / 365)) ^ 365) - 1
Learn more about APY calculations
Why Use Aavescan?
Aavescan offers tools to:
- Access live deposit and borrow rates.
- Download historical data in CSV format for Excel and Google Sheets.
- Easily compare rates across Aave versions.
Practical Uses of Aavescan Data
- Optimizing deposit strategies through historical APY analysis.
- Identifying optimal borrowing periods.
- Downloading CSV data for DeFi research and reporting.
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Disclaimer: Information provided is educational and not financial advice. Always conduct your own research before using DeFi platforms.