Credit · Lending · AAVE
Aave is a multichain non-custodial lending protocol for supplying, borrowing, and earning interest. The Aave DAO governs parameters, listings, and emissions; Aave Labs is the primary development company.
Savings for Everyone: open-source non-custodial liquidity protocol.
AAVE price
$122.48
+1.7% 24h
Latest data · 15 min delay
Aave is an , pooled money market: lenders deposit assets into shared reserves and borrowers draw against collateral they have posted, with interest rates set algorithmically by pool rather than by a credit committee. Since Aave V3 shipped on 16 March 2022 the protocol has layered risk controls on top of that base: efficiency mode, , and supply and borrow caps per asset. Aave V4 went live on Ethereum mainnet on 30 March 2026 with a hub-and-spoke design in which a Liquidity Hub holds assets centrally and Spokes connect to it with their own collateral types, risk parameters and liquidation rules, deployed initially as three hubs (Core, Plus, Prime) and eleven spokes. Loans are perpetual with no fixed maturity; positions are liquidated by third-party liquidators when the breaches its threshold, and Aave states it has liquidated more than $4.4B safely with zero bad debt across six-plus years of uninterrupted operation. Users span retail leverage, market-neutral basis traders, treasuries, and, through Horizon, institutions borrowing stablecoins against permissioned tokenised RWA collateral.
Scale and breadth: large multichain lending network plus native overcollateralized stablecoin (GHO), staking/backstop mechanics (stkAAVE → Umbrella), and institutional/RWA lending (Horizon) under DAO governance.
Core/Prime/Plus/Horizon markets: supply assets to pools, borrow against collateral, earn real-time interest. Not a token: the protocol product.
Interest-bearing deposit receipts (e.g. aUSDC) minted on supply; they accrue yield and are redeemable for underlying + interest.
Native Aave stablecoin minted by locking approved collateral via Aave.
GHO savings product: yield-bearing, not the stablecoin itself. New sGHO experience live May 2026.
AAVE governs the DAO; stkAAVE is the legacy Safety Module position being superseded by Umbrella.
Aave v1 launched on Ethereum mainnet 8 January 2020
Aave changelogAave V4, live on Ethereum mainnet since 30 March 2026; V3.3 (24 February 2025) remains the prior production line
Aave changelogAave Companies rebranded to Avara in November 2023; Aave Labs is the core development firm behind the protocol
TechCrunchDescribed as a for-profit company founded in 2017 by Stani Kulechov and based in Switzerland
Kraken LearnAAVE
Aave security pageForum at governance.aave.com; process is forum TEMP CHECK and ARFC (5+ days each), then 4-day off-chain Snapshot votes, then an on-chain AIP with a 3-day vote and 1-day timelock
Aave security pageEthereum, Avalanche, Polygon, Base, Arbitrum, OP Mainnet, Gnosis, BSC, Scroll, Linea, ZKsync Era, Metis, Sonic, Soneium, Celo, Mantle, X Layer, Plasma, Monad, MegaETH, Aptos, Fantom, Harmony
DefiLlama protocol API$14.35B total as of 26 July 2026 (Ethereum $11.96B, Plasma $509M, Arbitrum $417M, Base $408M, Monad $252M, Avalanche $240M, BSC $152M); $11.01B borrowed; Aave V3 alone $13.78B
DefiLlama protocol API65 audits listed. Firms include Certora (formal verification), ChainSecurity, Trail of Bits, OpenZeppelin, Spearbit, Sherlock, MixBytes, PeckShield, Sigma Prime, Consensys Diligence, CertiK, Zellic, OtterSec, Oxorio, Pashov, Enigma Dark, Savant, Blackthorn, Ackee, ABDK, StErMi, Quantstamp. SOC-2 Type II dated March 2026
Aave security pageAave Core bug bounty on Immunefi, up to $5M, live since 18 October 2023; Aave V4 bug bounty on Sherlock up to $3.5M, live since 18 May 2026. The Immunefi listing itself states a $1,000,000 maximum for its published scope
Aave security pagehttps://aave.com/docs
Aave changeloghttps://github.com/aave-dao, official repositories of the Aave DAO (aave-v3-origin, aave-governance-v3, aave-umbrella, aave-delivery-infrastructure)
GitHubClosest analogue
a secured overnight repo desk at a broker-dealer, financing a standardised haircut book against liquid collateral with mark-to-market margining.
Underwriting
Aave
No borrower credit assessment. Eligibility is a function of the asset's risk parameters (LTV, supply and borrow caps, ), set per reserve by DAO vote
TradFi analogue
Repo desk underwrites the collateral, not the counterparty's balance sheet, via an eligible-securities schedule
Collateral
Aave
crypto assets; from 2025 also permissioned tokenised RWAs (Superstate USTB and USCC, Centrifuge JTRSY and JAAA) inside the Horizon instance
TradFi analogue
Government bills and high-grade paper posted into a tri-party repo account
Settlement
Aave
Atomic on-chain settlement, T+0, no clearing house
TradFi analogue
DVP settlement through a tri-party agent, T+0 for overnight repo
Rate setting
Aave
Algorithmic curve per reserve, revised by governance; V4 routes rates per Spoke rather than per global pool
TradFi analogue
Repo rate set by desk against GC benchmark, re-priced daily
Recourse on default
Aave
None beyond seizing collateral. Liquidators repay debt for a bonus; the Umbrella backstop holds $148.41M as a residual buffer
TradFi analogue
Repo lender's sole recourse is to liquidate the collateral, then rank unsecured for any shortfall
Regulation
Aave
No licence. Changes go through on-chain AIPs; a 5-of-9 Community Guardian can veto malicious proposals during timelock. Horizon pushes KYC and whitelisting onto the RWA issuers, not the protocol
TradFi analogue
Broker-dealer regulated for capital, custody and conduct; eligible collateral prescribed by rule
Legal entity: Avara (formerly Aave Companies), with Aave Labs as the core development firm and the Aave DAO as the on-chain governing body. 2026 has been dominated by the separation of the DAO's service-provider layer from Aave Labs.
Aave DAO
On-chain governing body. Every change is an AIP voted on-chain by AAVE holders; no entity, including Aave Labs, can act alone
SourceCommunity Guardian
5-of-9 community multisig that can veto malicious proposals during the 1-day timelock
SourceMarc Zeller / Aave-Chan Initiative (ACI)
Governance and business development service provider. Announced on 3 March 2026 it will not seek renewal and will wind down over four months
SourceBGD Labs
Deployed the major updates to the V3 codebase; exited the ecosystem in February 2026, described by Zeller as the final straw
SourceChaos Labs (Omer Goldberg, CEO)
Risk manager from November 2022; terminated its Aave engagement, reported 6 April 2026, citing disagreement over how risk should be prioritised in the V4 transition
SourceLlamaRisk
Risk service provider; filed a proposal on 7 April 2026 to ensure continuity of Aave's risk management after the departures
SourceCumulative DAO-side capitalisation
February 2026 (disclosure)$86M total: $16.2M 2017 ICO, $32.5M VC rounds, $31.93M direct DAO payments, ~$5.5M unapproved swap fees; founding team retained 23% of LEND supply
DAO grant to Aave Labs
12 April 2026$25M plus 75,000 AAVE (~$6.8M), approved 522,780 for vs 175,310 against
Key milestones: launches, upgrades, exploits and governance events.
Aave v1 launches on Ethereum mainnet
StatedEstablishes the pooled liquidity design that the sector copies
SourceAave v3 launches with e-mode, isolation mode, supply and borrow caps
StatedShifts Aave from a single-risk pool to a parameterised risk system
SourceAave v3.3 adds logging and burn functionality for undercollateralised borrows and refines liquidation logic
StatedFormalises bad-debt handling in code rather than by governance patch
SourceAave Labs launches Horizon, a permissioned RWA instance on Aave v3.3
StatedOpens institutional borrowing against tokenised Treasuries and credit funds
SourceCommunity proposal to transfer all project IP, including social accounts and aave.com, to the DAO fails
StatedCrystallises the Labs-versus-DAO control conflict
SourceBGD Labs announces exit; AAVE falls 6% that day
StatedRemoves the team that shipped the V3 upgrades
SourceACI announces it will not renew and will wind down over four months
StatedSecond major service-provider exit; ACI cites undisclosed Labs voting power
SourceAave V4 goes live on Ethereum mainnet with three hubs and eleven spokes
StatedLargest architectural change since v1
SourceChaos Labs terminates its Aave engagement after three years
StatedThird risk-side departure; Chaos had priced every loan on Aave since November 2022
SourceDAO approves the $25M plus 75,000 AAVE Aave Will Win grant to Aave Labs
StatedConcentrates budget and direction in Labs
SourceJune 2026 development update: Aave V4 passes $200M in total deposits, Paxos Hub launched, ChainSecurity audit of the V4 TokenizationSpoke published
StatedShows V4 ramp is real but still small next to the $13.8B V3 book
SourceAave's own security page claims more than $4.4B liquidated safely with zero bad debt across six-plus years of operation (Aave security page). Chaos Labs, the outgoing risk manager, independently stated that during its tenure Aave processed over $2B in liquidations with zero material bad debt while growing from $5.2B to more than $26B in TVL (The Defiant). Aave v3.3 nonetheless added explicit logging and burn functionality to manage undercollateralised borrow positions, which is an admission that residual dust debt exists and needs handling (Aave changelog).
Rates follow a per-reserve curve whose parameters are changed only by an Aave Improvement Proposal voted on-chain by AAVE holders, with a mandatory timelock of one day for standard changes and seven days for governance changes (Aave security page). Historically the parameter recommendations came from external risk managers, principally Chaos Labs and LlamaRisk, working through the governance forum (Chaos Labs monthly community update). With Chaos Labs gone as of April 2026, LlamaRisk has proposed to take on continuity of that function (LlamaRisk continuity proposal).
Positions become liquidatable when the breaches its threshold and any third party can repay debt in exchange for discounted collateral. V4 moves liquidation rules down to the Spoke level, so each Spoke carries its own collateral types, risk parameters and liquidation rules rather than inheriting one global configuration (Aave V4 live). Aave has liquidated more than $4.4B cumulatively (Aave security page).
A smart contract failure or an oracle failure that lets a position drain a reserve. Aave mitigates with 65 audits, formal verification by Certora, a 5-of-9 Guardian veto during timelock, and the Umbrella backstop holding $148.41M (Aave security page). The second-order worst case is governance: DL News describes a protracted power struggle in which ACI alleged that the largest DAO budget vote was backed almost entirely by addresses linked to Aave Labs (DL News).
Horizon is an Aave-licensed institutional instance built on Aave Protocol v3.3 where permissioned RWA collateral (Superstate USTB and USCC, Centrifuge JTRSY and JAAA, Circle USYC coming) backs permissionless supply of RLUSD, USDC and GHO; aTokens for RWA collateral are non-transferable and issuers control whitelisting and KYC (Aave Horizon). It introduces issuer and legal-wrapper risk that does not exist in the crypto-collateral pools. Reported deposits reached $550M (BlockEden).
V4 launched 30 March 2026 (Aave changelog) and had surpassed $200M in total deposits by the June 2026 update, with a Paxos Hub live, Avalanche and Arc activations in preparation, and an AIP submitted for V3 on Monad (AL Development Update June 2026). Against $13.78B in V3 (DefiLlama), migration is at an early stage.
Not fully. The IP transfer proposal failed on 25 December 2025, BGD Labs exited in February 2026, ACI announced its wind-down on 3 March 2026, and the $25M Labs grant passed on 12 April 2026 (DL News, The Block). ACI stated it saw no role for an independent service provider where the largest budget recipient holds undisclosed voting power and uses it on its own proposals (DL News).
Bull case
Scale and share are unmatched: $14.35B TVL with $11.01B borrowed as of 26 July 2026 (DefiLlama), and Aave states it has processed over one trillion dollars in cumulative loans while holding more than 50% of the decentralised lending market (Aave V4 live).
DefiLlamaCredit track record is the best in the sector: more than $4.4B liquidated with zero bad debt over six-plus years, plus a $148.41M Umbrella backstop (Aave security page).
Aave security pageSecurity spend is real, not nominal: 65 audits, Certora formal verification across Hub, Spoke and Libraries, a SOC-2 Type II in March 2026, and zero high-severity findings across 345 days of review and a 900-participant public contest for the V4 governance update (Aave security page).
Aave security pageInstitutional distribution is live rather than theoretical: Horizon spans Ant Digital Technologies, Chainlink, Ethena, KAIO, OpenEden, Ripple, Securitize, VanEck and WisdomTree (Aave Horizon) and reportedly reached $550M in RWA deposits (BlockEden).
Aave HorizonBear case
The independent risk layer has been dismantled inside six months: BGD Labs out in February 2026, ACI winding down from 3 March 2026, Chaos Labs terminated in April 2026 after pricing every loan since November 2022 (DL News, The Defiant).
DL NewsThe risk-budget gap is quantified and unresolved: Aave Labs offered to raise the risk budget to $5M while Chaos Labs estimated $8M minimum was required to cover a V4 codebase it described as entirely new, with Risk Oracle infrastructure that cannot be ported (The Defiant).
The DefiantGovernance capture is an explicit allegation from an insider: ACI alleged the largest budget vote in DAO history was backed almost entirely by addresses linked to Aave Labs, and a proposal to move IP to the DAO was defeated (DL News).
DL NewsThe token has de-rated hard against the fundamentals: AAVE traded near $96 in April 2026, down roughly 73% from an August 2025 high of $356 (The Defiant).
The DefiantExternal publications on this protocol: risk assessments, analyst reports, audits and post mortems.
Itemises $86M of Labs capitalisation and the 23% founding-team LEND allocation, the source document for the 2026 governance fight
ACI cancels its GHO stream, cuts its own AAVE vesting and hands infrastructure back to the DAO over four months
Proposes LlamaRisk absorb the risk-management function vacated by Chaos Labs
Flags Pendle principal-token collateral as a concentrated maturity and liquidity risk inside Aave
Long-running monthly parameter and market-risk reporting thread, the primary public record of Aave risk telemetry
Documents the $5M versus $8M risk-budget gap and the V4 Risk Oracle portability problem
Best single narrative of the IP vote, the V3-pause red line and the Labs voting-power allegation
Transaction-level Aave V3 study: liquidations cluster in waves, the ten largest waves are ~80% of liquidated volume, borrower losses run 10 to 30% of liquidated value
Max supply
Buyback policy
Aavenomics buys back AAVE with protocol revenue (~$1M/week, ~$50M/yr scale).
Distribution
