Aave is a decentralized non-custodial liquidity protocol where users can participate as depositors or borrowers. Depositors provide liquidity to the market to earn a passive income, while borrowers are able to borrow in an overcollateralized (perpetually) or undercollateralized (one-block liquidity) fashion.
AAVE is a prominent lending protocol with the largest Total Value Locked (TVL) in the DeFi lending category, showcasing strong technical capability and economic design. The founder and core team possess the relevant experience to drive the protocol forward. However, we have some concerns about potential risks including the governance risk stemming from a fairly high token ownership concentration, and the economic risks caused by an absence of both a fallback oracle and a price check mechanism to handle abnormal price feeds from the sole oracle.