Greetings, Aave community!
Aave Labs has continued to make steady progress on multiple protocol endeavors in line with its service provider scope.
The below summary highlights developments in the Aave Protocol and reflects Aave Labs’ transparent and collaborative approach of building in public, welcoming community feedback, and fostering auditability through open-source principles.
May update:
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Advanced the DeFi United rsETH recovery effort, including liquidations, collateral recovery, and lockbox refills.
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Supported Aave V4 growth past $100M in deposits and launched frxUSD and USDG incentives.
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Completed Aave V4 SVR feed migration, CAPO updates, liquidator configuration work, and Blackthorn audit report publication.
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Supported Aave V3.7 Phase II and launched MegaETH incentives for USDe and USDM.
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Continued Aave Horizon development, with TVL surpassing $340M and SVR feed migration testing progressing.
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Improved Aave Kit SDK performance, reducing key API response times by up to 29x.
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Progressed Aave App launch readiness across banking, Stable Vault audit, and operational infrastructure.
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Delivered Aave Pro and Interface updates, including rewards, watch wallets, Markets, liquidations, sGHO, and governance UX.
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Reduced swap costs by enabling 0% flash loan fees for CoW-routed Aave V3 swaps.
rsETH Incident
The DeFi United recovery effort progressed across multiple fronts throughout May. The rsETH attacker positions on Arbitrum and Ethereum were liquidated by AIP#478, with the collateral transferred to the Recovery Guardian. A second phase of the recovery plan was published, outlining the next steps in the remediation process. In parallel, the Arbitrum AIP to release 30,000 ETH into the remediation effort reached quorum.
Work on the rsETH recovery process remained ongoing throughout the month, with priority focused on completing remediation and operational steps on Ethereum and Arbitrum first. Aave fully restored ETH liquidity across affected deployments while keeping rsETH frozen as a precautionary measure. Liquidity levels continued to normalize throughout the recovery process, and rsETH lockbox refills were completed immediately following the liquidations to support the restoration effort. Remaining recovery work at month-end was focused on coordinated rsETH lockbox refills.
Aave Protocol
Aave Labs published an ARFC introducing a standardized Technical Asset Listing Framework, building on the Asset Classification and Assessment (ACAA) Framework. The framework proposes a consistent methodology for evaluating assets helping establish clearer requirements for asset onboarding and asset expansions discussions.
Aave V4
Aave V4 continued its growth trajectory throughout the month, surpassing its first major milestone of $100M in total deposits. As adoption increased, the DAO approved three successive increases to (add/draw) Caps, expanding market capacity to accommodate growing demand.
Aave Labs also activated the first incentive campaigns on V4, covering frxUSD and USDG. These campaigns represent the first targeted growth initiatives on the new architecture and are intended to support liquidity formation and user adoption during the early stages of the market.
On the infrastructure side, the migration to Chainlink SVR (Smart Value Recapture)-based price feeds was completed, alongside efforts to unify configuration setups for liquidators across all instances of Aave, facilitating more efficient liquidation operations, and CAPO price adapters were updated to refresh their parameters. SVR has become an increasingly important contributor to protocol revenue generation, producing approximately $5M in revenue for Aave during 2026 to date.
Security and transparency remained a priority throughout the month. The Blackthorn audit report for Aave V4 was published publicly, providing additional visibility into the protocol’s security review process and audit findings.
Aave V3
Aave Labs continued supporting Aave V3 maintenance and governance activities throughout May. A significant portion of the team’s efforts during the month focused on restoring normal protocol operations and coordinating ecosystem response efforts following the rsETH incident.
In parallel, the BGD-authored AIP#489, supported by Aave Labs, completed the second phase of the Aave V3.7 upgrade across Aave Ethereum (Core and Prime), Polygon, Avalanche, Arbitrum, Base, BNB Chain, Linea, Plasma, and Mantle. Aave Labs reviewed the implementation, coordinated with ecosystem contributors, and monitored execution across all affected instances to ensure a smooth rollout.
Aave Labs also launched two incentive campaigns on Aave V3 MegaETH Market, distributed via Merkl. The campaigns introduced incentives for USDe and USDM markets, supporting early liquidity and user activity on the network.
What else are we working on?
GHO
The most significant GHO development during May was the launch of the upgraded sGHO savings product. Following the approval and activation of the corresponding governance proposal, the existing savings product was rebranded as StkGHO (legacy). Aave Labs supported @TokenLogic throughout the rollout by reviewing the implementation, coordinating integration efforts, and adding support for the new sGHO.
Aave Horizon
Aave Horizon continued to gain traction in May, surpassing $500M in TVL. The milestone reflects growing adoption of Horizon as Aave’s institutional-grade RWA lending product and further strengthens its position within the broader tokenized asset and institutional lending landscape.
On the development side, Aave Labs progressed engineering work related to Horizon’s migration from V3 price feeds to SVR-based feeds. Additional testing was completed during the month as part of the ongoing effort to improve oracle infrastructure and support the next phase of Horizon’s evolution.
Aave Kit (SDK)
Significant performance improvements have been rolled out to the underlying API powering Aave Kit SDK. Optimizations to commonly used queries have resulted in up to a 29x reduction in response times, delivering a faster and more responsive experience for developers and end users alike. These improvements benefit all applications built on Aave Kit, including Aave Pro.
Aave App
US production bank deposits are now fully operational, while EU pre-production bank deposits and withdrawals are also functioning successfully as testing and integration efforts continue. The Stable Vault has entered the final week of its audit process, bringing the product closer to deployment readiness.
On the operational side, the vault management infrastructure is now live and functioning as intended, and the balance protection policy has been activated to support user safeguards.
The launch timeline has been finalized, with the required budget allocated to support rollout activities. To keep the community informed and gather feedback, an Aave App launch ARFC is expected to be posted in the upcoming weeks.
Aave Pro
Rewards functionality has been launched on Aave Pro, with the first incentive campaigns now live and available to users. In addition, watch wallets functionality has been introduced, enabling users to monitor wallet activity and positions directly within the platform.
Aave Pro continued to receive product and usability improvements throughout the month. A new Markets view was launched, bringing a broad range of market data into a dedicated interface and making it easier for users to explore available markets and compare opportunities across the protocol. The first version of a liquidation activity feed was also shipped, allowing users to view their liquidation history directly within the application and providing greater visibility into account activity.
In parallel, a series of UI fast-follows were delivered to improve the overall user experience. These included consistent deposit APY ranges across wallet assets, displaying actual user APY on reserve pages instead of protocol rates, refining frozen asset warnings, improving contrast in the borrow asset picker, and enhancing table sorting behavior throughout the interface.
Aave Interface
The new sGHO experience went live. The dedicated sGHO page now displays both the legacy stkGHO and the new sGHO side by side, allowing users to compare positions and migrate between the two experiences seamlessly. Additionally, support for PT-USDG was added across the interface, completing the asset listing across the full application stack.
Governance-related UX improvements continued throughout the month. Proposal list views now surface voting outcomes directly, making it easier for users to track governance activity at a glance. Additional enhancements to proposal timelines are being designed and prepared for implementation, including clearer visibility into voting periods and expected execution timelines for proposals that are active or queued.
CoW Adapters
CoW adapter work during May focused on improving swap infrastructure and reducing execution costs for users. CoW Adapters were whitelisted as FlashBorrowers across Aave V3 markets. Enabled by the Aave Will Win (AWW) governance framework, this change allows collateral and position swaps routed through CoW Protocol on Aave V3 to benefit from 0% flash loan fees, improving execution quality and reducing swap costs across both app.aave.com and pro.aave.com.
What’s coming next?
Our main focus for the coming month will be
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Complete the rsETH recovery process and restore normal operations.
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Continue Aave App release efforts and share an updated timeline with the DAO.
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Advance Aave V3 governance execution, including proposal coordination, parameter updates, and contributor proposal reviews.
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Support GHO growth initiatives, including Plasma capacity increases and ongoing sGHO integration efforts.
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Improve Aave Pro onboarding and usability through an enhanced new-user experience and new market pages featuring activity and parameter details.
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Continue SDK and Interface enhancements, with a focus on developer migration, reserve data, and market lifecycle support.
Stay tuned for next month’s update.
Aave Labs