What is Aave
Aave is a decentralised lending and borrowing protocol that lets users deposit cryptocurrencies to earn interest, or borrow assets by providing collateral, all via smart contracts with no intermediaries.
It's one of the longest-running DeFi protocols with the highest total value locked (TVL); it introduced innovations like "flash loans" — uncollateralised loans that must be repaid within the same blockchain transaction.
Frequently asked questions
Is Aave regulated in the UK?
The UK has its own evolving regime for cryptoasset regulation, separate from the EU's MiCA framework. Crypto exchanges and custodians must register with the FCA for anti-money laundering purposes, but this doesn't equate to the investor protections that regulated financial instruments like ETFs and shares carry.
What's the difference between buying Aave on an exchange versus via an ETP?
On an exchange you hold the keys directly (or the exchange custodies them for you); an ETP (Exchange Traded Product) is instead a listed financial instrument that tracks the price, purchasable through the same broker account you'd use for ETFs and shares.
How is Aave taxed in the UK?
Gains from cryptocurrencies in the UK are generally subject to Capital Gains Tax, with specific rules that differ from those for ETFs and shares held in an ISA — this is an evolving area, so check the latest HMRC guidance or speak to a tax adviser for your situation.
