With the last proposal of his DAO, Aave is about to become the mastodon of decentralized finance. Modification of the reward system for stakers, increased security in the face of risks and even service providers for other protocols. Aave brings a new era into the DEFI.
Aave becomes a new generation decentralized finance protocol
Started in 2024, The migration of the decentralized finance protocol (DEFI) has a more resilient and more generous system for stakers continues.
Without going into technical details, which are numerous, the old architecture of the protocol presented several weak points. These were all risks for users and customers of Aave.
Because, let us remember, Aave is a money loan system. This DEFI protocol allows lenders to participate in the network by receiving rewards, and customers to borrow money by putting cryptocurrencies in warranty. In other words, Aave is a Lending protocol.
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Although he had never had serious crises, such as debt attacks or a Depeg of his stablecoin Gho, The Aave protocol was not completely safe.
It is for this reason that during the summer of 2024, A transformation of security systems was proposed by one of the heavyweights of the Aave DaoAave Chan Initiative, founded by Marc “Billy” Zeller.
After Half a Decade of Hard Work, with the Aci, we proud to present the updated aavevenomics proposal to the aave dao.
We consider it the most important proposition in our history, feel free to have a read and provide feedback.
Just use aave.https: //t.co/nbhr5q6hqb
– Marc “Billy” Zeller 👻 🦇🔊 (@lemiscate) March 4, 2025
This transformation relates to 2 major points:
- Protect Stablecoin Gho ;
- Protect users and the network against the risk of bad debt events,, In other words, the crises caused by too much debt that would tip the balance of the protocol.
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The Umbrella protection service against “bad debt”
Another major modification of the Aave protocol: the implementation of the Umbrella system to protect users against bad debt events.
In the event of a too large debt, which can be caused by market volatility or by a lack of liquidity on the lenders, The Aave protocol can collapse. Fortunately, there are protection systems.
Until then, it was the Safety Module, funded up to $ 424 million, which protected Aave against this risk. Issue, This Safety Module could not, in fact, guarantee such an amount of poor debt.
Because the safety module was made up of GHO and Aave, respectively the stablecoin and the cryptocurrency of Aave.
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To cover $ 424 million in debt, The Safety Module should have selected its $ 424 million of Gho and Tokens Aave.
- The final sale price would have been less than $ 424 million Because of the lack of available liquidity;
- The sale would also have provoked a crash on the Aave and a possible Depeg on the GHO;
- Once the 2 essential cryptos of the protocol collapsed, The entire project would have fallen into a serious crisis of confidence from which he would probably never have come out.
Safety module was therefore replaced by a protocol named Umbrella. Unlike the Safety Module, Umbrella separates the different types of debts and protection so as not to cause a domino effect.
Moreover, The operation of Umbrella is not based on a secondary market : It is not by selling cryptocurrencies that the protocol will guarantee the funds. No risk of slipping, crash, depeg or sales at a loss.
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Change of category for Aave
This modification of the protection system modifies the operation of the Aave protocol, In particular the awards granted to stakers which will be more important.
To guarantee the migration of these security systems, the ACI team behind this DAO proposal had given the objectives to be achieved in July 2024in terms of volumes and network size:
- A volume of 200 million dollars on the stablecoin gho ;
- a growth of the liquidity generated by the protocol.
Despite a first quarter of 2025 in a saw tooth, These objectives have been achieved and outdated. These encouraging results pave the way for new perspectives. In particular the possibility of extending the Umbrella security system to other protocols defi.
📰 In the news: Aave unfolds on Sonic, the first layer 1 of the year
Among the Potential candidates for the Umbrella programthe ACI team offers:
- ETHEREUM MAINNET, Core & Prime Instances;
- Network avalanche;
- Sonic;
- Arbitrum;
- Gnosis;
- Base.
These developments dig the gap between Aave and the other DEFI protocols. More, they position aave as a reliable partner, providing solid guarantees for institutional actors.
The arrival of the big fish of finance in the DEFI is considered by analysts as the event that will explode decentralized finance. Some people believe that the DEFI could Weigh several thousand billions of dollars by 2030.
In this context, Aave would not only impose itself as a central player, but also as a service provider for other protocols while being the gateway for large financial institutions. In other words, Aave would reign over the deffi.
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Source: Aave
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Investments in cryptocurrencies are risky. There is no guaranteed high yield, a product with high performance potential implies a high risk. This risk taking must be in line with your project, your investment horizon and your ability to lose part of this savings. Do not invest if you are not ready to lose all or part of your capital
Cryptocurrency expert, Marc-Antoine began his trip to the web 3 alongside David Prinçay (current president of Binance France) in the French Cryptomonnaies club. Since then, it was by writing articles in the most famous crypto media in France that he spreads the good word. If you have read an article on the crypto, there is a good chance that you have read one of its articles. NFT, Blockchain, Web 3, DEFI, there is not a sector that is foreign to it. And do not ask him what is the next corner that you should buy: it is a maximalist bitcoin (yes, no one is perfect).
Marc-Antoine Caen Poletti
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