This technical guide explains how to use Aave, the leading decentralized liquidity protocol, to borrow assets after supplying collateral. We will focus on the Aave V3 implementation.
Step 1: Supplying Collateral
Before you can borrow, you must supply assets to the protocol.
Navigate to the Aave Protocol Official dApp.
Connect your wallet and select a market (e.g., Ethereum).
Choose an asset you hold (e.g., ETH) and click "Supply."
Approve the contract and confirm the transaction.
You will receive interest-bearing aTokens (e.g., aETH) in your wallet, representing your supplied collateral.
Step 2: Understanding Your Borrowing Power
Your supplied assets determine your "Borrowing Power." This is based on the Loan-to-Value (LTV) ratio of your collateral. A "Health Factor" above 1 indicates a safe position, while a factor below 1 risks liquidation.
Step 3: Borrowing an Asset
From the dashboard, find an asset you wish to borrow (e.g., USDC).
Click "Borrow."
Choose between a "Stable" or "Variable" interest rate.
Enter the amount to borrow and confirm the transaction.
The borrowed assets are now in your wallet. Remember to monitor your Health Factor to avoid liquidation. For a full breakdown of the risk parameters and innovative features like Aave flash loans, refer to the https://sites.google.com/restaking-node-portal.net/aave/.
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