You can earn interest on crypto or borrow against it through a lending pool, yet two pools that look alike can treat the same deposit very differently. In one design, a single measure covering the whole account decides when it can be liquidated, while in another each coin you post carries its own borrowing and liquidation limits.
Both protocols run on Ethereum, and both set loan rates from how much of a pool is borrowed. The choice comes down to what your collateral does in the pool, which coins you can borrow, and which number lets a liquidator step in. Aave runs one shared pool for many coins at once, which is the core of what Aave is as a protocol.
What is the difference between Aave and Compound?
Aave pools many listed assets in one market, and each reserve's settings decide whether a supplied coin can also back a loan or be borrowed. Compound III builds each market around one borrowable base asset, such as USDC, and the other coins you supply there only back that loan. Both liquidate a position whose collateral falls short.
On Compound III, you post coins as collateral so you can borrow the market's base asset. Accounts that supply the base asset itself earn interest on it, and the first deployment ran on Ethereum with USDC as that base asset. Compound III now also runs markets built on other base assets, such as WETH and USDS (source: Compound, Compound III Docs). A USDC market therefore lends only USDC, and the WETH, WBTC, and other listed coins in it are there to back the loan.
Your base-asset balance on Compound III is a signed number. Above zero means you supplied the base asset and earn the current supply rate. Below zero means you borrowed it (source: Compound, Collateral & Borrowing). Whether the coins you post as collateral also earn is the sharpest split between the two protocols, and the next section works it through with the same 10,000 USDC on each side.
| Question | Aave V3 | Compound III |
|---|---|---|
| What can you borrow? | Any asset whose reserve has borrowing turned on | The market's one base asset, such as USDC |
| Does supplied collateral earn interest? | Yes, through aTokens | No, only a positive base balance earns |
| How is a loan tracked? | Variable debt tokens | A negative base-asset balance |
| What decides liquidation? | One Health Factor per account, read against 1 | Each asset's liquidation collateral factor |
| How do rates move? | Utilization, with two slopes around an optimal point | Utilization, with a kink in each rate model |
| What happens at liquidation? | A liquidator repays part or all of the debt for collateral at a bonus | The protocol absorbs the whole account and pays out the remaining value minus a penalty |
On Aave, suppliers add coins to shared liquidity pools that borrowers then draw from. Compound III works on the same pooled idea inside each market, and because the pool is shared, every new loan lowers the cash available for withdrawals. That trade-off runs through all Ethereum lending mechanics, whichever protocol you pick.
Supplying assets and earning interest
Supplying on Aave mints aTokens, such as aUSDC, whose balance grows as borrowers pay interest until you burn them to withdraw. Supplying the base asset on Compound III creates a positive balance that earns the supply rate. Any other coin you supply to that market only backs a loan in the base asset.
When you supply USDC or WETH on Aave, the pool mints aTokens such as aUSDC or aWETH. These are ERC-20 tokens whose balance rises over time from the interest borrowers pay into the pool. Withdrawing redeems them for the underlying coin with the interest earned. That works as long as the pool holds enough unborrowed liquidity and any open loan stays covered by your collateral (source: Aave Docs, Aave V3 Overview).
Take 10,000 USDC as a worked example: you supply it to an Aave V3 market, and about 10,000 aUSDC arrives in your wallet. After borrowers pay interest on that reserve, the aUSDC balance reads higher than 10,000 without any claim step. When you withdraw, the aUSDC is burned and USDC comes back. The same aUSDC can back a loan while it keeps earning. The catch is that you can only take out USDC that is not lent out at that moment (source: Aave Help, Introduction to Aave). When a reserve is almost fully borrowed, you either wait or take a smaller amount. That wait is the main liquidity risk to plan for when you supply on Aave.
Send the same 10,000 USDC to the Compound III USDC market, and your base balance becomes positive 10,000 USDC. That balance grows as the supply index rises, and it earns the supply rate. Send 4 WETH to that market and it counts as collateral. It raises how much USDC you may borrow. Compound III collateral earns nothing while it sits there (source: Compound, Collateral & Borrowing). If you want both yield and borrowing power from the same coin, that difference alone points you to Aave.
On Aave, your first supply of an asset that can serve as collateral is turned on as collateral automatically (source: aave-dao, Aave V3 SupplyLogic). To keep a supply as savings, switch off its use-as-collateral toggle in the Supply section of your dashboard (source: Aave, FAQs). Turning collateral off goes through only when the collateral that remains still keeps your Health Factor above 1. That single account-wide number is the center of how Aave works for anyone who borrows.
How the Aave Health Factor works
Aave measures loan safety with one Health Factor for the whole account. It equals the value of your collateral times its weighted liquidation threshold, divided by what you owe. Above 1 the account is safe from liquidation, but below 1 a liquidator can repay part of the debt and take collateral at a bonus.
Suppose your collateral is $10,000 of ETH with a liquidation threshold of 80%, and your GHO loan is $6,000, which gives a Health Factor of 1.333. To raise it, you can supply more collateral or repay part of the loan (source: Aave Help, Liquidations). The arithmetic below shows how much room you have.
Health Factor = (10,000 x 0.80) / 6,000 = 1.333
Liquidation point = 6,000 / 0.80 = $7,500 of collateral
Buffer = 10,000 - 7,500 = $2,500 of ETH value
In that example, the ETH can lose $2,500 of value, a quarter of its worth, before the Health Factor touches 1. Interest pushes the same way, because a growing debt lowers the number even when the ETH price stays flat. So the buffer you choose has to cover both a price drop and the interest that builds while the loan is open.
How much a liquidator can close depends on the Health Factor and the size of the position. Up to half the debt can be liquidated while the Health Factor stays above 0.95 and collateral and debt are each worth at least $2,000. All of it can go once the Health Factor is 0.95 or lower, or when either side is under $2,000. A partial liquidation has to keep at least $1,000 of both collateral and debt in the account (source: Aave Help, Liquidations).
Mixed collateral is where one shared number matters most, because when you turn on ETH and USDC together, the market weights each by its own liquidation threshold before one Health Factor comes out. A fall in ETH can then pull the whole account toward 1 while your USDC holds steady. No single Health Factor is safe for everyone, since the right buffer depends on how volatile your assets are and how closely they move together (source: Aave Help, Liquidations). Pick a buffer that fits your collateral, and work through the Aave liquidation and Health Factor rules before your first loan.
How Compound III collateral factors work
Compound III gives every collateral asset two limits. The borrow collateral factor sets how much of the base asset you may borrow against it. A separate, higher liquidation collateral factor decides when the account can be liquidated. The gap between the two acts as a price buffer for every new loan.
Each collateral asset raises your borrowing capacity by its borrow collateral factor. At an 85% factor on WBTC, for example, you could borrow up to 85% of the dollar value of your supplied WBTC in the base asset (source: Compound, Collateral & Borrowing). Because liquidation runs on the second, higher factor, governance can lower a borrow factor without pushing existing loans into liquidation (source: Compound, Liquidation).
Here is a full USDC borrow on the Ethereum USDC market, where WETH carries a borrow collateral factor of 82.5% and a liquidation collateral factor of 88.0%, with a liquidation penalty of 7.00% (source: Compound, Compound III Docs). Suppose you supply 4 WETH while ETH trades at $2,500, so your collateral is worth $10,000 and you borrow 6,000 USDC against it.
Most you can borrow = 10,000 x 0.825 = 8,250 USDC
Your loan = 6,000 USDC
Liquidation point = 6,000 / 0.88 = $6,818.18 of WETH
WETH price at that point = 6,818.18 / 4 = $1,704.55
Your loan sits 2,250 USDC below the borrowing limit, and ETH has to fall by about $795 per coin before the account can be liquidated. Now compare the Aave example above, which used the same $10,000 of collateral and the same $6,000 of debt. There the liquidation point arrives at $7,500 of collateral, because that example used an 80% threshold. The gap comes from the parameters each market sets for each coin, so compare the live numbers for the exact asset you plan to post.
Liquidation on Compound III works on the whole account at once. Any liquidator, whether a bot, a contract, or a person, can call absorb on an account that has crossed its liquidation limit. The protocol then takes all of your collateral and repays your debt from its own reserves of the base asset. You receive the collateral's value minus the penalty, paid in the base asset, so you end with no debt and usually a positive balance. While those reserves sit below a target that governance sets, anyone can buy the seized collateral from the protocol at a discount, which rebuilds the reserves (source: Compound, Liquidation).
In the example above, an absorption at $6,818.18 of WETH clears the 6,000 USDC loan. Against that debt, you are credited 6,818.18 x 0.93 = 6,340.91 USDC of value. Your base balance moves from minus 6,000 USDC to a positive balance of about 340.91 USDC, which earns the supply rate. On Aave, the share of the loan a liquidator can close depends on how far below 1 the Health Factor has fallen, so part of a position caught early can stay open. The liquidator's bonus there depends on the collateral asset, for example 5% on ETH and 15% on YFI. At 5%, repaying 2.5 ETH of debt hands the liquidator 2.5 ETH plus a 0.125 ETH bonus from your collateral (source: Aave, FAQs).
Collateral risk limits on Aave V3 and Compound III
Aave V3 limits a risky coin with Efficiency Mode (E-Mode) categories, supply and borrow caps, and a loan-to-value (LTV), the share of its value you can borrow, that can be set to zero. Compound III gives each collateral coin two collateral factors and a supply cap, and each market lends only its one base asset.
Aave V3 used to carry two more limits for this job. Isolation Mode made a coin your only collateral, let it back loans in a short list of assets, and capped total borrowing against it with a debt ceiling. Siloed Borrowing meant that borrowing a flagged asset ruled out borrowing any other. The v3.7 upgrade removed both, since few assets ever used them and E-Mode categories had taken over the work (source: Aave DAO, Aave v3.7: Isolation Mode & Siloed Borrowing Removal).
Governance applied v3.7 in two parts. The second part was executed on May 28, 2026 for Ethereum Core, Polygon, Arbitrum, Base and other networks. Before the new contracts went live, it set any non-zero debt ceiling to zero and turned off every asset's eligibility for borrowing in isolation (source: Aave Governance, Upgrade Aave instances to v3.7 Part 2).
Riskier collateral now sits behind settings every asset already has. An E-Mode category can make a coin count as collateral only inside that category, and an LTV of 0 stops a coin from being switched on as collateral at all. Supply and borrow caps on each asset then limit how much debt the pool can build around it (source: Aave DAO, Aave v3.7: Isolation Mode & Siloed Borrowing Removal).
The v3.7 upgrade also added an isolated flag to E-Mode categories. In an isolated category, only the coins on the category's collateral list add borrowing power. Every other coin you supplied counts as LTV 0, so it backs no new loan. It still counts toward your liquidation threshold and Health Factor (source: Aave DAO, Isolated eMode in Aave v3.7).
Suppose you supply WETH and LINK, both switched on as collateral, and an ETH category marked isolated lists WETH but not LINK. You cannot enter that category until you switch LINK off as collateral or withdraw it. Once inside, a new LINK supply is accepted, but it stays out of your collateral. A different case starts with LINK still switched on as collateral in a category that is not yet isolated. If governance then marks that category isolated, LINK drops to LTV 0 at once and backs no new borrowing. To unwind, you either withdraw LINK before your other collateral or leave the category, which restores LINK's base LTV. Your Health Factor does not move (source: Aave DAO, Isolated eMode in Aave v3.7).
Compound III handles the same risk per coin and per market. Each collateral asset carries its own borrow and liquidation collateral factors (source: Compound, Liquidation). New collateral is accepted only while that coin sits below its supply cap, which limits the protocol's exposure to it (source: Compound, Collateral & Borrowing). The debt side is limited by design, since each market lends only its one base asset. Both protocols change these settings through governance, so read an asset's current limits in the app before you supply.
Efficiency Mode for correlated assets
Efficiency Mode (E-Mode) lets you pick an Aave category of assets that move together in price. That category's loan-to-value, liquidation threshold, and liquidation bonus then replace the standard settings. Once E-Mode is on, you may borrow only assets inside that category, which is the trade for higher borrowing power.
Liquid E-Modes on V3 let one asset belong to more than one category. Each category carries its own loan-to-value, liquidation threshold, liquidation bonus, and borrowable assets. You can turn E-Mode on, switch it, or turn it off from the dashboard near your account summary, or directly on the contracts. Each change is a transaction you confirm in your wallet (source: Aave Help, Efficiency Mode).
The usual example is collateral that tracks ETH, such as a liquid staking token that sits with WETH in an ETH category. In standard mode, the token uses its own loan-to-value and liquidation threshold. In the ETH E-Mode category, borrowing is limited to ETH-correlated assets, and the higher loan-to-value and liquidation threshold let the same deposit back a larger WETH loan. Stablecoin categories work the same way, so USDC can back a loan in another stablecoin from the same group at a higher ratio.
That limit is the price of the extra capacity, so when you want to borrow an asset outside the category, you turn E-Mode off first and the standard settings return. Which categories you can pick depends on the assets you hold and on how governance groups them, so check the live list before you assume a token fits an E-Mode category.
E-Mode keeps the liquidation point at a Health Factor of 1 and changes only the weights inside the formula. A basket of coins that move together can sit closer to 1 with less risk. Even so, a stablecoin depeg or a discount on a staking token still moves the number. E-Mode raises what you can borrow, and it gives no protection against a broken peg.
Interest rates and utilization
Both protocols set rates from utilization, the share of a pool's supply that is currently borrowed. Aave V3 uses a two-slope curve around an optimal utilization point. Compound III uses a supply model and a borrow model, each with a kink above which the rate climbs faster.
Aave borrow rates rise along the first slope up to the optimal point and faster along the second slope above it. Suppliers earn the interest borrowers pay, minus the reserve factor that the protocol keeps (source: Aave Docs, Aave V3 Overview). High utilization pushes rates up, which pulls in new supply and repayments. When most of a pool sits idle, rates come down (source: Aave Help, Introduction to Aave).
On Compound III, governance sets the supply model and the borrow model separately, and both depend on how much of the base asset is borrowed. Utilization is total borrows divided by total supply, with interest accruing every second (source: Compound, Interest Rates). Below the kink, the borrow rate is a base rate plus the low slope times utilization. Above it, the high slope applies to the part past the kink.
Here is that formula with the borrow settings the Ethereum USDC market launched with on August 26, 2022. They are a base of 0.015, a low slope of 0.035, a kink at 0.8 and a high slope of 0.25 (source: Compound, comet USDC market configuration). The base and both slopes are yearly rates, whereas the kink is a utilization level of 80% (source: Compound, comet NetworkConfiguration.ts). Suppose the market has 100 million USDC supplied and you hold a 10,000 USDC loan.
70 million borrowed: utilization 0.70
rate = 0.015 + 0.035 x 0.70 = 0.0395 a year
cost on 10,000 USDC = 395 USDC a year
90 million borrowed: utilization 0.90
rate = 0.015 + 0.035 x 0.80 + 0.25 x (0.90 - 0.80) = 0.068 a year
cost on 10,000 USDC = 680 USDC a year
Twenty more points of utilization add 285 USDC a year to the same loan. Of that, 250 USDC comes from the ten points above the kink. Aave's second slope works the same way, which is why a loan on either protocol can turn expensive fast when a pool is nearly fully borrowed. Governance can change these settings, so read the current borrow annual percentage yield (APY) on the live market before you size a loan.
Debt on Aave V3 is variable-rate and tracked by variable debt tokens such as variableDebtUSDC (source: Aave Docs, Aave V3 Overview). On Compound III, the loan is the negative base balance itself, which grows as the borrow index rises (source: Compound, Collateral & Borrowing).
Flash loans on Aave
An Aave flash loan lets a smart contract borrow pool liquidity with no collateral, on the condition that the amount and a fee come back before the same transaction ends. If the repayment does not arrive, the whole transaction reverts, so the pool never carries an unpaid flash loan.
A flash loan is taken and repaid inside one transaction, and it is built for contracts that finish their work in that one step. Your contract calls the Pool, receives the funds, runs executeOperation(), and then repays the amount with the fee. If the amount owed is not there at the end, the transaction reverts. With flashLoan(), a borrower can instead open a variable-rate loan at the end, backed by supplied collateral or credit delegation. The single-reserve flashLoanSimple() always charges the fee, with no option to open a loan (source: Aave Docs, Flash Loans).
The fee started at 0.05% at deployment and can be changed by a governance vote. Approved flash borrowers can have the flashLoan() fee waived (source: Aave Docs, Flash Loans). Since the v3.4 upgrade, every flash-loan fee goes to the protocol treasury in the borrowed token (source: BGD Labs, Aave v3.4 features). At the launch rate, a 1,000,000 USDC flash loan costs 500 USDC in fees, so check the current fee on-chain before you build around it.
Aave flash loans power tools you may use without noticing them, including Aave's own liquidity switch feature. Contracts also use them for arbitrage between assets and for liquidating loans without holding the repayment amount up front (source: Aave Docs, Flash Loans). As a supplier, you provide the liquidity those calls draw on.
Flash loans draw on the same shared pool that ordinary Aave borrowers use. They need no Health Factor because they close within one transaction. A loan you plan to hold for days is an ordinary Aave loan with collateral behind it, and how to borrow on Aave starts from that collateral step.
GHO as Aave's stablecoin
GHO is Aave's own overcollateralized stablecoin, designed to hold a value of one US dollar. Since the v3.4 upgrade, executed on July 2, 2025, GHO on the Aave V3 Ethereum Core market uses the same token model as every other asset listed there (source: Aave Governance, Upgrade Aave instances to v3.4).
The GHO is minted into the lending pool ahead of time. A borrow draws from GHO that already sits in the pool, and a repayment sends it back. Neither step creates new GHO or changes its total supply (source: BGD Labs, Aave v3.4 features).
You get GHO by supplying collateral to Aave and borrowing it. The collateral must be worth more than the GHO issued, which gives a buffer if prices fall (source: Aave Help, GHO Stablecoin). Minting runs through facilitators, which are entities or protocols that Aave Governance approves to mint and burn GHO. Each facilitator gets a bucket capacity, the most GHO it may mint (source: Aave Help, Facilitators). On Core, the facilitator is the GhoDirectMinter, a contract that mints GHO and supplies it to the pool, and no other address can supply GHO there. The borrow rate is a flat figure that utilization does not move. Only governance or the GHO Stewards change it (source: Aave Governance Forum, ARFC BGD Aave v3.4). A GHO borrow then faces the limits any Aave asset has, the market's borrow cap and the GHO still unborrowed in the pool (source: Aave DAO, GhoDirectMinter).
Who fills the pool is the comparison fact that matters. A USDC loan on Aave draws USDC that other wallets supplied, while a GHO loan draws GHO that governance minted into the pool, so the protocol itself decides how much GHO is there to borrow. A Compound III USDC market only lends the USDC that its suppliers deposited. The 1.333 Health Factor example earlier used a GHO loan, and GHO debt counts toward your Health Factor like any other Aave loan. Maker, Spark, and DAI follow a different stablecoin and credit design, which matters if you weigh Aave against Maker, Spark, and DAI for a dollar loan.
A dollar token that the protocol mints itself and lends only against excess collateral is the core of what GHO is. It is also what sets GHO apart from centralized stablecoins such as USDT and USDC. The Aave community steers GHO through Aave Governance, which decides its interest rates and collateral rules (source: Aave Help, GHO Stablecoin).
AAVE token holders make those governance decisions through proposals and votes (source: Aave Help, Introduction to Aave). Holding AAVE is a separate decision from supplying or borrowing, and readers comparing the two protocols often want the token too. BloFin offers AAVE/USDT Spot, which credits AAVE you can withdraw to a wallet, and the AAVEUSDT Perpetual, a USDT-margined contract on the AAVE price.
Maker and taker rates for both AAVE markets are on the BloFin fee schedule, so check your fee tier before you size a trade.
Choosing between Aave and Compound
Choose by what you need the deposit to do. Aave suits a deposit that should earn interest and also back a loan in a different coin, under one Health Factor. A Compound III market suits a loan in its one base asset against coins you are happy to hold idle, with two clear limits for each coin.
From BloFin Academy's desk, the cleanest way to read either protocol is to name three things before you sign anything. Those are the asset you supply, the asset you borrow, and the number that liquidates you. On Aave that number is the Health Factor, read against 1. On Compound III it is the liquidation collateral factor of each asset you posted, checked against the price where your loan crosses it.
Aave V3 remains in production for supplying and borrowing (source: Aave Help, Introduction to Aave). Aave V4 went live on Ethereum on March 30, 2026. In V4, a Hub holds the liquidity that you supply and borrow through connected Spokes (source: Aave Labs, Aave V4 is Live on Ethereum). Read the version label in the app before you supply, because V3 and V4 are different sets of contracts.
Checklist before you supply or borrow:
- Confirm the protocol, network, and market in the app you trust, including the Aave version or the Compound III base asset.
- On Aave, check the asset's LTV, its supply and borrow caps, and which E-Mode categories it belongs to, including whether a category is marked isolated.
- On Compound III, note the borrow and liquidation collateral factors for each coin you post, and work out the price where your loan crosses the second one.
- Supply first, then check the use-as-collateral toggle on Aave, because an eligible first supply is turned on as collateral automatically.
- If you borrow, keep a buffer that matches how closely your assets move, and read the live borrow APY.
Before a large supply, weigh the price-feed and shortfall risks in whether Aave is safe, and compare vault-based lending through Aave versus Morpho.
If your interest is the token's role in voting, compare AAVE with other governance tokens before you buy.
Looking to trade AAVE tokens on BloFin? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, then open the AAVE/USDT Spot trading page or the AAVEUSDT Perpetual page.
Frequently asked questions
Can I withdraw collateral from Compound III while a loan is open?
You can withdraw only the collateral that is not backing an open borrow. Each withdrawal is checked against the borrow limits of what remains, because the withdraw function also handles borrowing the base asset. Below those limits, the account cannot borrow more until it adds collateral or repays part of the loan. That pause on new borrowing comes before liquidation (source: Compound, Collateral & Borrowing). Liquidation starts only at the separate, higher liquidation collateral factor (source: Compound, Liquidation). On Aave, a collateral withdrawal during an open loan goes through only if it leaves the position clear of liquidation (source: Aave, FAQs).
Is there a minimum loan size on Compound III?
Each Compound III market sets a minimum borrow size, and a borrow that would bring your loan under it reverts. The minimum applies to your first borrow only, so later borrows on the same account can be any size (source: Compound, Collateral & Borrowing). At launch, the USDC market on Ethereum set that minimum at 100 USDC in its deployment settings (source: Compound, comet USDC market configuration). Check the current minimum in the app before a small test loan. Aave sets no minimum amount to supply, though a supply cap can limit how much of one asset the pool accepts (source: Aave, FAQs).
Who can liquidate a position on Aave?
Anyone can, because Aave liquidations are permissionless. In practice the work goes to specialists running custom bots that watch borrow positions, react to oracle price moves and parameter changes, and send high-priority transactions to be first in line. Competition between them is intense, so assume a position whose Health Factor falls below 1 will be found fast. Tools that simulate price moves or repay a loan automatically exist, though you use them at your own risk (source: Aave Help, Liquidations).
Where does the interest on GHO loans go?
Interest that GHO borrowers pay goes to the Aave DAO treasury, which supports the protocol and its governance (source: Aave Help, GHO Stablecoin). That is a key difference from borrowing USDC on Aave, where the interest borrowers pay goes mostly to the wallets that supplied the USDC. You can also get GHO without a loan through the GHO Stability Module, which exchanges other stablecoins for GHO at set ratios (source: Aave Help, Stability Module). Some swap apps connect to that module directly (source: Aave Help, Facilitators).
What is the difference between loan-to-value and liquidation threshold on Aave?
Aave also uses two numbers per collateral asset, much like Compound III. Loan-to-value sets how much you can borrow against a coin when you take a loan. If the loan-to-value for ETH were 75%, you could borrow as much as 75% of what your supplied ETH is worth. After you borrow, falling collateral pushes your debt-to-collateral ratio up. When that ratio reaches the threshold, the position risks liquidation, which is the point the Health Factor tracks (source: Aave Help, Introduction to Aave).
What protects lenders on Aave and Compound III from bad debt?
On Aave, Umbrella, where users stake aTokens or GHO, now covers deficits and replaces the legacy Safety Module (source: Aave Docs, Umbrella). Compound III relies on reserves held by each market. Reserves grow from the gap between what borrowers pay and what suppliers earn, and liquidations can add to them. Governance can also withdraw or use those reserves (source: Compound, Liquidation). Umbrella and Compound III's reserves run on settings that governance chooses, so read each protocol's risk updates before a large deposit.
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. Primary sources include Aave V3 documentation (overview, flash loans), the Aave FAQ, the Aave V3 SupplyLogic contract, Aave Help (introduction to V3, liquidations, Efficiency Mode, GHO, facilitators), the Aave Governance v3.7 upgrade proposal, the Aave v3.7 notes on GitHub (Isolation Mode and Siloed Borrowing removal, isolated E-Mode), the Aave Labs V4 launch note, Compound III documentation (overview, collateral and borrowing, interest rates, liquidation), and the Compound III USDC market configuration and deployment code on GitHub. All facts independently verified against cited documentation current as of October 2026.
This article is for informational and educational purposes only. It is not financial, investment, trading, or legal advice. Cryptocurrency can lose value. Borrowing on Aave can lead to liquidation if the health factor drops below 1. Spot AAVE/USDT buys the token. An AAVEUSDT Perpetual is a contract on the price. Do your own research. Consider your circumstances before using any protocol or trading any asset.