Aave
Aave lets you borrow against collateral and manage the position through repayment
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Aave lets you open a borrow position against eligible supplied collateral and close it by repaying the debt. Before submitting, check the selected market, available borrowing amount and projected health factor. Once borrowing succeeds, interest accrues on the outstanding balance. Repayment reduces that obligation, while withdrawing your supplied assets requires a separate transaction.
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The first decision is the proposed borrow amount, which you can revise before signing. After execution, the account carries an obligation. Keeping the debt balance, collateral value and repayment funds in view makes that change easier to manage.
In short: Repaying debt reduces the borrowing obligation, while withdrawing collateral remains a separate action subject to available liquidity and account restrictions.
Supplied collateral and borrowing eligibility
Ordinary collateral-backed borrowing requires an eligible supply balance that the selected market recognizes as collateral. Tokens sitting in a wallet do not provide that borrowing capacity. Supplying moves assets into the protocol, while collateral status determines whether those assets support debt. An asset can be available for supply without qualifying as collateral under the applicable settings.
Check collateral status before choosing the borrowed asset. Enabling eligible collateral makes its borrowing capacity available without itself creating debt. Disabling it later becomes conditional when an outstanding obligation relies on that balance. The protocol restricts changes that would leave the account below its required collateral coverage.
How much can I borrow against my supplied balance?
Your borrowing limit depends on eligible collateral, its loan-to-value settings and existing debt, together with the selected reserve’s available liquidity and restrictions. Loan-to-value, or LTV, determines how much borrowing the collateral supports when opening or increasing a position. The liquidation threshold serves a different purpose: it helps determine when existing debt becomes eligible for liquidation. Neither figure makes the displayed maximum a recommended amount. Borrowing less leaves more capacity unused, although price movements can still weaken the position.
Wallet funds and market selection
The connected account and selected market must match the position you intend to manage. A balance displayed in another market does not automatically support this borrow. Check the selected network before approving a supply or borrowing transaction, especially when the wallet shows the same token name in several places. The token and its deployment must match the action.
Keep transaction funding separate from the collateral amount. Network fees apply to onchain actions, including repayment. Supplying all available spending funds can leave the wallet unable to submit a later transaction without additional funding. The wallet presents an estimated transaction fee before confirmation; that fee does not form part of the loan principal.
Borrow size and the transaction preview
The borrow preview connects the proposed amount to the account’s projected debt and health factor before you commit. Start with an editable amount and inspect how changing it affects the resulting position. The displayed rate describes borrowing under the applicable conditions; it does not lock the future cost of variable-rate debt. Reserve liquidity, prices and permissions can change between a preview and execution. Closing an unsigned request leaves the proposed borrowing unexecuted. Once the transaction succeeds, reducing the obligation requires repayment rather than editing the earlier request.
A borrow request when reserve settings change
Consider an account with eligible supplied collateral whose intended borrow depends on the reserve remaining available. Sufficient collateral is one requirement. The reserve’s configuration at execution determines whether the requested credit action can proceed.
Conditions before submission
- The selected account has collateral enabled in the market that will record the debt.
- The requested asset permits borrowing, and the reserve is neither frozen nor paused.
- Available liquidity and remaining borrowing capacity cover the proposed amount.
- Any applicable borrowing cap or account-mode restriction permits the request.
- The projected health factor remains above 1 after including the new debt, and the wallet can fund the transaction.
The recorded outcome
Borrowing remains available
If these conditions remain satisfied and the transaction succeeds, the account receives the borrowed asset and records the corresponding debt. Inspect the completed transaction, refreshed borrowing balance and resulting health factor together. A transaction submission alone does not establish those changes. Record the amount actually borrowed before making another request.
The reserve becomes frozen
A frozen V3 reserve blocks new borrowing. If the request fails for that reason, adding collateral does not remove the restriction. Confirm the failed transaction before considering another submission. Borrowing can resume only when the relevant permissions and other requirements allow it. Freezing alone still permits repayment and withdrawal, subject to their remaining conditions; a separate pause can impose additional restrictions.
Debt costs and health factor while the position stays open
The outstanding balance includes accrued borrowing interest, so the amount needed for full repayment can exceed the original principal. Variable borrowing costs respond to the reserve’s interest-rate strategy and utilization. A rate displayed when the position opens cannot establish its total eventual cost. Duration and subsequent rate changes also matter.
Health factor compares collateral value, adjusted by its weighted liquidation threshold, with total debt value. Both sides can change. Falling collateral prices can weaken coverage, and rising prices of borrowed assets can increase the debt’s value even without another borrow.
A health factor below 1 makes a V3 borrowing position eligible for liquidation. Liquidators can repay eligible debt and receive collateral plus the applicable liquidation bonus. The amount subject to liquidation depends on the deployment’s rules and position conditions. Repayment or additional eligible collateral can improve coverage, but the account remains exposed until a successful action changes its state. A single health-factor reading therefore describes the position at that moment.
Which repayment method fits the position?
Repayment from a wallet uses the borrowed asset, while supported collateral-repayment features use supplied assets to fund the repayment. Wallet repayment requires enough of the correct token on the relevant network. It reduces debt without consuming the existing collateral balance, apart from any separate action you choose to perform.
Repaying through a collateral swap reduces both the debt and the assets supporting it. Availability depends on the market and supported integration. The exchange quote, slippage limit and projected remaining health factor matter because the transaction combines repayment with collateral use. A failed swap leaves that combined repayment uncompleted.
For wallet repayment, any required token allowance must cover the transfer. Approval authorizes spending; the repayment transaction performs the debt reduction. A completed approval can therefore coexist with an unchanged loan balance. Confirm which transaction the wallet is asking you to sign.
Accrued interest and the final debt balance
Partial repayment leaves an outstanding balance that continues accruing interest under the applicable rate. Full repayment must cover the debt at execution, including accrued interest. Copying an earlier displayed amount can leave a residual obligation. A supported full-repayment option accounts for the complete debt rather than only the original principal. After execution, inspect the remaining balance for each borrowed asset in the selected market. Clearing one asset does not clear another, and a rounded display can conceal a small remaining amount.
A successful repayment from wallet funds improves health factor when other inputs remain unchanged. Prices can move between the before-and-after readings, so compare the actual debt reduction as well.
Collateral withdrawal and the final account record
Closing all debt removes the borrowing obligation, but it does not automatically send supplied assets back to the wallet. Those assets remain supplied until withdrawal. You can retain the supply position or request an exit, with different consequences: retaining it preserves exposure to the supplied asset and protocol, while withdrawal requires enough available pool liquidity.
A withdrawal against an account that still has debt must also preserve the required collateral coverage. Even after complete repayment, unavailable liquidity or an applicable pause can prevent immediate withdrawal. Inspect the successful withdrawal amount and remaining supply balance before treating the exit as complete. If the account shows no debt but still holds a supply position, borrowing has ended while the supplied assets remain in the protocol.
Questions people ask about Aave
Can I choose a fixed interest rate for a new V3 borrow?
New borrowing through the V3 Pool uses variable-rate debt. The opening rate does not fix the interest charged throughout the position. A repayment budget therefore needs to account for the outstanding balance and subsequent rate changes, rather than treating the initial displayed rate as a contractual lock.
Why does repayment request another token approval after I already approved a supply?
Repayment through an ERC-20 token transfer needs a sufficient allowance for the token and contract performing that transfer. An earlier supply approval may concern another token, another spender or an allowance that the supply consumed. Inspect the requested spender and amount before authorizing repayment; approval alone does not reduce the debt.
Does sending borrowed tokens to another wallet transfer the loan?
Sending the borrowed tokens elsewhere leaves the borrowing obligation on the original account. V3 variable debt tokens are non-transferable records of principal and accrued interest. Moving the spendable asset therefore does not move the collateral requirement or make the receiving address responsible for repayment.
Is a pending repayment enough to prevent liquidation?
A pending repayment has not yet reduced the debt recorded onchain. Liquidation eligibility continues to depend on the account’s actual state until execution changes it. Submission time alone does not establish which transaction will execute first, so an unconfirmed repayment cannot establish that the position has recovered.
Will switching the selected network move my open borrow position?
Switching the wallet’s selected network does not move an existing borrow position. The original market continues to record its collateral and debt. Managing that obligation requires interacting with that market; funds visible on another network do not automatically become available there for repayment.
Can a matching supply balance repay my V3 debt directly?
V3 supports repayment using the corresponding reserve’s aTokens through its repayWithATokens function. This consumes the matching supply representation and reduces debt for that underlying asset. It differs from swapping another collateral asset, and the available interface must support the operation.