Greetings, Aave community!
Aave Labs has continued to make steady progress across multiple protocol initiatives in line with its service provider scope.
During September, Aave V4 expanded to two new networks and surpassed $1B in deposits, while work advanced across risk management, integrations, technical assessments, governance, and product development. The update below reflects Aave Labs’ transparent and collaborative approach to building in public.
September update:
- Released the official Aave Model Context Protocol (MCP) server, enabling AI tools and agents to interact with Aave.
- Aave V4 surpassed $1B in deposits, reaching a new record high.
- Activated Aave V4 on Arc and on Base, where the Equities Hub enables Coinbase tokenized equities to be used as collateral.
- Activated the Aave V4 Risk Stewards on Ethereum, Avalanche, and Base for routine risk parameter adjustments, with a tailored configuration for the tokenized equities on Base.
- Onboarded PAXG to the Aave V4 Global Dollar Hub.
- Published the Custodied Collateral Lending ARFC.
- Continued working with the Babylon team on the integration and its launch.
- Executed the Low Adoption Asset Deprecation and advanced the oracle deprecation across Aave V2 and V3.
- Conducted and published the technical assessments of Arc and its launch reserves, USDC on X Layer, and the Coinbase tokenized equities on Base.
- Expanded early access to the Aave App and enabled USDC and USDT on Ethereum.
- Added Base support to Aave Pro, delivered a new look for the Aave V3 interface, and launched a token relations dashboard.
- Continued development across GHO and Aave Horizon.
Aave Protocol
The team released the official Aave MCP server, which lets AI tools and agents interact with Aave through any MCP client, without authentication, an API key, or signup.
Aave V4
Aave V4 continued its growth during September. Deposits surpassed $1B for the first time alongside $310M in active loans. Deposits on the Avalanche deployment grew from approximately $20M to $30M, while USDG neared $100M on Aave V4.
Aave V4 also expanded to two new networks. The protocol went live on Arc (Snapshot) with USDC, EURC, cirBTC, and WETH available as reserves from launch. @LlamaRisk provided the risk analysis and Chainlink the price feeds. Further proposals will be raised to activate cross-chain governance on the network. The deployment on Base (Snapshot) followed, with the Equities Hub as its first market. The Hub lists seven Coinbase tokenized equities as collateral, with USDC as the only borrowable asset. Both activations were carried out by the Aave V4 Protocol Security Council, as part of the hardening process for the new deployments.
Risk management on Aave V4 reached an important milestone, as the Aave V4 Risk Stewards (Snapshot) were activated on Ethereum, Avalanche, and Base through AIP 523. The Risk Stewards can now apply routine risk parameter adjustments within bounds set by governance, bringing the model established on Aave V3 to Aave V4 and reducing the need for frequent intervention by the Aave V4 Protocol Security Council. As activity increased, rounds 15, 16, and 17 of Add Cap and Draw Cap adjustments were implemented through the Aave V4 Protocol Security Council, while round 18 was executed through the Risk Stewards. Going forward, parameter updates will follow the standard Risk Steward process and its usual communications, rather than regular updates on the Aave V4 Ethereum forum thread.
Integration work also advanced. PAXG from Paxos went live on the Global Dollar Hub through AIP 516. The proposal deployed the PAXG Gold Spoke, where users can borrow USDG against PAXG, and made USDG borrowable on the Pendle Spoke.
We also published the Custodied Collateral Lending ARFC, which proposes a new Aave V4 Isolated Hub and Spoke where institutions could borrow stablecoins against collateral held with a qualified custodian. In parallel, we continued working together with the Babylon team to review and harden the integration’s implementation, and to coordinate its launch.
Aave V3
Aave V3 activity remained robust during September. Active loans reached $12.5B, weETH crossed $4B in deposits, and the X Layer deployment neared $200M in deposits.
The Low Adoption Asset Deprecation proposed by @LlamaRisk was executed through AIP 521, which the team implemented. It winds down reserves with limited adoption, reducing the protocol’s risk surface. In parallel, the team advanced the implementation of @LlamaRisk’s Oracle Deprecation across Aave V2 and V3, and the corresponding AIP is in preparation.
@LlamaRisk’s LlamaGuard PT risk oracle went live on Aave, following the team’s review of its implementation in August. It runs on the Chainlink Runtime Environment (CRE) and dynamically manages PT collateral risk. The configuration change applied to the Aave V3 Risk Steward in August was also carried over to the Aave V4 Risk Stewards through AIP 523.
Governance Proposals
Governance work during September combined proposals prepared by Aave Labs with technical review for other DAO Service Providers.
We created 4 AIPs:
- AIP 516: Onboard PAXG to Aave V4 Global Dollar Hub.
- AIP 520: Maintenance: Grant AL RETRY_ROLE on a.DI (Part 2).
- AIP 521: Low Adoption Asset Deprecation on Aave V3.
- AIP 523: Aave V4 Risk Stewards Activation.
The team also reviewed 4 AIPs created by DAO Service Providers:
- AIP 517: Add X Layer Loop Tool & Margin Trading to FlashBorrowers.
- AIP 518: USDC GSM Arbitrum.
- AIP 519: Onboard USDC to Aave V3 X Layer.
- AIP 522: Safety Module August 2026 - Allowance Update.
Technical Assessments
Technical assessment work supported the month’s network expansion and listings. We published the network assessment of Arc ahead of the Aave V4 deployment on the network, together with asset assessments of USDC, EURC, cirBTC, and WETH, the reserves available at launch. The team also published the assessment of USDC on X Layer.
What else are we working on?
GHO
The Aave Savings Rate was increased to 4.50% APR, available to users depositing into Savings GHO. The team also reviewed AIP 518, through which @TokenLogic deployed the USDC GHO Stability Module (GSM) on Arbitrum, as well as the September GHO Stewards update, which raised the GHO borrow rate on Horizon and adjusted the GSM burn fees.
Aave App
Early access to the Aave App expanded throughout September, with Ghost Pass drops shared across X, Instagram, and Telegram, including drops dedicated to users in the United States. Ghost Pass claiming was also added through skate.aave.com, and all Ghost Passes offered to the Base community were claimed. USDC deposits from Base went live in the app, and USDC and USDT were enabled on Ethereum.
Aave Horizon
Two new assets advanced under the Horizon asset onboarding process: HINC, the Neuberger Securitize High Income Tokenized Fund, and mWIN, a tokenized fixed income portfolio managed by Wellington Management and issued by Midas. Both ARFCs progressed through community discussion, and @LlamaRisk published its support for onboarding HINC. The team’s technical assessments of both assets are in progress.
Aave Pro
Aave Pro supported Aave V4 on Arc from launch, with the new market available on pro.aave.com. Support for Base also shipped, including trading of tokenized equities. The app now displays the underlying yield for supported tokens and uses readable URLs in place of base64 hashes, for example pro.aave.com/explore/token/USDC. More selections now persist across the app, so filters retain previous choices when returning to a page, and performance improvements made the interface faster and more reliable. Work continued on the new Earn and Borrow flows, light mode, and leverage and position swaps.
Aave Interface
The Aave V3 interface was redesigned during September, refreshing the experience across the app and introducing dark mode. Asset swaps and position swaps, powered by CoW Swap, also went live on the Plasma market, allowing users to swap assets, as well as collateral and debt positions.
Aave Web
A new token relations dashboard went live, presenting key statistics on the Aave Protocol, with further metrics planned for its next version.
What’s coming next?
Our main focus for the coming month will be:
- Raise the proposals to activate cross-chain governance for Aave V4 on Arc.
- Continue coordinating the Babylon integration launch with the Babylon team.
- Create the AIP for the oracle deprecation across Aave V2 and V3.
- Complete the technical assessments of HINC and mWIN for Aave Horizon.
- Introduce the new Earn and Borrow flows in Aave Pro.
- Add light mode to Aave Pro.
- Add leverage and position swaps to Aave Pro.
- Expand the token relations dashboard with further metrics.
Stay tuned for next month’s update.
Aave Labs