Introduction

what is Ethereum? Ethereum is a decentralized global software platform powered by blockchain technology. It is most commonly known for its native cryptocurrency, ether (ETH). Ethereum can be used by anyone to create any secured digital technology. It has a token designed to pay for work done supporting the blockchain, but participants can also use it to pay for tangible goods and services if accepted.source

what is Aave? Aave is a decentralized cryptocurrency platform that allows users to borrow and lend crypto. Aave uses smart contracts to automate the process, with preset rules on how funds are distributed, how collateral is handled, and how fees are assessed. Aave specializes in overcollateralized loans, meaning that users will need to deposit crypto worth more than the amount that they wish to borrow. This protects lenders from losing money due to loan defaults and allows the Aave protocol to liquidate the collateral if it drops too much in value. Aave also offers a native crypto token (AAVE) that can be traded on most exchanges or staked in the Aave platform to earn interest. Staking is how crypto miners earn rewards for validating transactions on a proof-of-stake blockchain like the one that underlies Aave.source

what is liquidation? Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due. As company operations end, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims. General partners are subject to liquidation.source