By What Assets Does Aave Plan To Offboard?
Aave has proposed removing dozens of low-adoption reserves and closing six smaller blockchain deployments under a governance initiative affecting approximately $98.1 million in supplied assets and $15.6 million in outstanding debt.
The review covers 50 low-adoption reserves and 21 matured Pendle Principal Tokens across 11 Aave V3 deployments. It also recommends fully winding down Aave markets on Sonic, Scroll, zkSync, Metis, Soneium and Aptos, covering another 25 reserves.
The individual reserve removals account for about $85.3 million in supplied assets and $11.5 million in debt. The six deployment-wide closures represent an additional $12.8 million in supplied assets and $4.1 million in borrowing.
Aave founder Stani Kulechov announced the proposal on Thursday. Risk service provider LlamaRisk prepared the recommendations after reviewing the protocol’s markets under the proposed Aave Risk Framework.
The exercise is not tied to a failure involving one specific token. Instead, it applies a common set of standards across Aave’s portfolio and asks whether each reserve generates enough activity and revenue to justify its operating and risk-management costs.
Why Is Aave Removing Low-Usage Markets?
Every lending reserve requires infrastructure to remain active. Aave must maintain price oracles, liquidation systems, supply and borrowing limits, monitoring processes and governance support even when a market attracts little liquidity or revenue.
Low-adoption reserves can therefore create an unfavorable balance between income and risk. Thin markets may also be harder to liquidate during periods of volatility, increasing the chance that falling collateral values leave the protocol with unpaid debt.
The proposal targets bridged assets that duplicate native token listings, matured Pendle PTs that no longer produce yield and smaller deployments where protocol revenue does not cover maintenance expenses. Removing duplicate or inactive markets could reduce the number of failure points that Aave contributors must monitor.
The six network closures also show that deployment growth alone is no longer the main priority. Aave appears more willing to retire markets that have not developed enough deposits, borrowing activity or fee generation to support continued operation.
Investor Takeaway
Aave is trading network coverage for tighter risk controls and lower operating costs. The proposal could make the protocol easier to manage, but affected users will need to withdraw liquidity, repay debt or move positions before market conditions become less favorable.
How Would The Wind-Down Process Work?
Aave plans to discourage new activity gradually rather than closing affected markets immediately. For individual reserves, the protocol would freeze new usage, reduce supply and borrowing caps to one unit and increase reserve factors on assets that can still be borrowed.
A higher reserve factor directs a larger share of borrower interest to the protocol rather than suppliers, reducing the economic appeal of keeping funds in the market. Cutting caps to one unit would effectively stop new deposits and loans while allowing existing users time to exit.
The six deployments marked for retirement would face stronger measures. Reserve factors would rise to 99%, while base borrowing rates would increase to encourage borrowers to repay and liquidity providers to withdraw their assets.
These settings are designed to shrink markets without forcing abrupt liquidations. Still, users who delay may face rising borrowing costs, lower lending returns or thinner liquidity as other participants unwind first.
The proposal will require governance approval before implementation. The timing of each change may also depend on outstanding positions and whether users respond quickly enough to reduce debt and supplied balances.
How Does The Plan Fit Aave’s New Risk Framework?
The reserve review follows the risk framework proposed in June after the approximately $292 million KelpDAO bridge exploit. Stolen rsETH was deposited as collateral, exposing Aave to the possibility of bad debt and renewing debate over how the protocol evaluates bridged and long-tail assets.
Kulechov said the framework would govern asset listings, continuing reviews and future removals across Aave V3, the upcoming Aave V4 and Aave Horizon. Assets that fail to meet the required standards could be restricted or removed even when no direct loss has occurred.
A separate LlamaRisk proposal addresses another group of long-tail reserves exposed to elevated Chainlink price-feed risk. That plan would replace live market feeds with fixed-price adapters, limiting the chance that unreliable or illiquid pricing triggers improper borrowing or liquidation activity.
Together, the proposals point to a more defensive operating model. Aave is seeking to reduce exposure to markets with weak liquidity, duplicated collateral, expired yield products or infrastructure costs that exceed the revenue they produce.
The governance proposal may have limited immediate effect on token value, but its longer-term importance lies in whether Aave can lower tail risks without reducing activity in markets that could eventually become profitable.