Summary
LlamaRisk recommends the deployment of Aave to the Ink network, conditional to a technical review by @BGDLabs. Key considerations include the Ink Foundation’s developing familiarity with Aave’s codebase, ongoing assessment of technical alignment, and the current liquidity distribution on Velodrome.
We have previously reviewed the network and found that key risks included a centralized sequencer and limited network maturity (low TVL, high TVL concentration into Velodrome, and limited pricing infrastructure).
Since then, these risks have remained the same, except Chainlink Data Feeds going live recently. Limited TVL and high DEX concentration results in potentially low initial supply caps. The team is optimistic and expects to reach $1B TVL in under 90 days.
Risks
LlamaRisk sees primarily counterparty risk and technical risk. Market risk is also present.
This instance is operated by the Ink Foundation, which has yet to manage such technology. As evidenced by the hard work of countless service providers, operating an Aave codebase is a complex endeavor in the most liquid of ecosystems. LlamaRisk looks forward to working alongside a responsive team of experts from the Ink Foundation to help mitigate the countless risks incurred by operating a lending protocol - which LlamaRisk has been reassured its (and other service provider’s) expertise will be called upon on a case by case basis.
The Network Review from @BGDLabs will also offer further technical insights and validation. This review, customary for Aave protocol deployments to any new networks, is being conducted to ensure thorough due diligence. This means there is a risk that Ink is a potentially unsuitable environment for the protocol. While Ink is a superchain (meaning it has many similarities with many networks on which the protocol is already flourishing), this risk should not be discounted. Given the critical importance of technical risk to Aave, we will reserve our recommendation to proceed until this has been completed and all findings are resolved.
Source: Ink liquidity pools, Velodrome, June 25, 2025
Finally, limited market liquidity presents a risk to the protocol on Ink. While good starting liquidity for major assets is visible, it is insufficient to facilitate large trades with limited price impact - resulting in the potential for uncollateralized positions. This low level of liquidity will necessitate low supply caps, resulting in limited revenue potential. It is worth noting that nearly all liquidity on this network is concentrated into Velodrome, with many large pairs having one address supply 90% of the liquidity, further increasing market risk as this liquidity could quickly disappear.
Disclaimer
This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.