Aave
Aave collateral supports borrowing only within the account’s applicable limits
Updated:
Aave collateral provides borrowing power when the market accepts the supplied asset and the account enables it as collateral. That power can fall or remain at zero because existing debt consumes the allowance, prices change or collateral parameters restrict further borrowing. A visible supply balance alone does not establish usable capacity. Start with the selected account and market, then distinguish an account limit from a restriction on the asset being borrowed. Adding funds addresses only some causes. The V3 settings described below depend on the deployed version and configuration, so identical token names can accompany different borrowing permissions across markets.
What's inside
A positive supply balance can provide no additional borrowing capacity when collateral permissions, effective LTV or market restrictions block the loan.
A supplied balance with no borrowing capacity
Zero available borrowing alongside a positive supply balance calls for a read-only check of the account, market and collateral status before another transaction. These checks distinguish missing collateral recognition from exhausted borrowing capacity.
The account view should match the address that owns the supply position. The selected market must also contain that position. A wallet token balance, a supplied balance and an enabled collateral balance represent different states. Comparing them does not require moving funds or signing a message.
A pending transaction leaves the intended change unresolved. A confirmed supply with collateral disabled points to eligibility or configuration instead.
Enabling existing collateral or reducing debt
A confirmed supply that contributes no expected borrowing power presents two possible corrections: enable eligible collateral that is currently disabled, or repay debt that consumes the allowance. The shared requirement is a confirmed account change that addresses the identified cause. Neither option changes reserve permissions or configured caps, although repayment can free capacity under a cap.
Consider an account whose supply appears correctly, while the expected borrowing amount remains unavailable. Check which correction the account needs before signing, then confirm the resulting collateral status or remaining debt before trying to borrow again.
| Stage | Inspection or action | Evidence to retain | Required condition |
|---|---|---|---|
| Match the position | Compare the selected address and market with the supply transaction. | Matching account and recorded supply. | The supply belongs to this account and market. |
| Inspect collateral status | Read whether the supplied asset contributes collateral. | Enabled or disabled status. | The market recognizes the supply balance. |
| Locate the constraint | Compare effective LTV, debt and reserve restrictions. | The condition that prevents the requested borrow. | Account and reserve data describe the same market. |
| Select the correction | Choose eligible collateral activation or repayment, as applicable. | A preview consistent with the identified cause. | Activation is permitted, or repayment is permitted and the required debt and repayment funds exist. |
| Submit the correction | Authorize the selected operation after any required token allowance. | The submitted transaction identifier. | The wallet can authorize the action and pay the network fee. |
| Confirm the account change | Read collateral status or remaining debt after successful execution. | The expected change in the correct account. | The transaction succeeded; a pending request is insufficient. |
| Reassess borrowing | Refresh the requested amount and its projected health factor. | Updated capacity and borrowing eligibility. | The original constraint has changed and remaining restrictions permit borrowing. |
If the account record contradicts the successful transaction, stop before submitting another correction. Retain the transaction identifier and error text without sharing wallet secrets.
Effective LTV and exhausted capacity
Loan-to-value, or LTV, determines how much borrowing value eligible collateral supports. Each asset contributes according to its effective settings, including any applicable E-mode configuration.
V3 account borrowing capacity equals collateral value multiplied by its weighted average LTV, less existing debt, with a floor of zero. The calculation expresses collateral and debt in the same valuation currency. It describes the account allowance before asset-specific borrowing restrictions. An effective LTV of zero contributes no new borrowing allowance, even when the account still displays the supplied asset. Increasing that balance alone therefore does not restore capacity under unchanged settings.
Why can my health factor exceed 1 while borrowing power is zero?
A health factor above 1 can coexist with zero borrowing power because liquidation thresholds and borrowing limits serve different purposes. Existing debt can consume the LTV-based allowance before reaching the liquidation boundary.
Separate borrowing and liquidation calculations
Health factor compares liquidation-threshold-weighted collateral value with debt value. An Aave V3 debt position becomes eligible for liquidation when its health factor falls below 1, subject to applicable protocol protections.
Debt at the borrowing limit
Where the liquidation threshold exceeds LTV, debt can exhaust borrowing capacity while health factor remains above 1. That remaining margin accommodates some deterioration before liquidation eligibility.
Collateral with zero effective LTV
A parameter change can remove an asset’s contribution to new borrowing while retaining a positive liquidation threshold. The asset can then support existing debt health without supporting additional borrowing.
Price changes and accumulating debt
Borrowing capacity can decline without any new transaction because collateral valuations and outstanding debt change over time. A lower collateral price reduces its borrowing contribution when other inputs remain unchanged.
A higher borrowed-asset price raises the debt’s value in the account calculation. Borrowing interest also increases the obligation. Meanwhile, supply interest can increase the collateral token balance without offsetting those effects. Diagnose the movement using token quantities, protocol valuations and effective parameters separately. A stable token quantity does not imply stable borrowing power, and a growing supply balance does not establish that debt coverage improved.
E-mode permissions for the selected assets
E-mode can alter collateral parameters while restricting the assets that an account may borrow. The selected category must therefore support the intended debt asset as well as the collateral configuration. Similar asset names do not establish membership. Under V3.6 rules, collateral and borrowing permissions inside E-mode can differ from the base-market permissions. A base-market parameter alone may consequently misdescribe an E-mode position. Where an isolated E-mode configuration applies, assets outside its permitted collateral set can contribute zero LTV. Changing categories also requires compatible enabled collateral and existing debt, plus an acceptable resulting health factor.
Isolation restrictions and shared debt ceilings
Markets that use V3 Isolation Mode restrict borrowing against designated isolated collateral to approved debt assets and an aggregate debt ceiling. The ceiling concerns borrowing backed by that isolated collateral across the market, rather than only one account. Adding more of the same collateral cannot overcome an exhausted ceiling. Isolation Mode also limits combining that collateral with other enabled collateral assets. Where siloed borrowing applies, the restriction concerns holding other borrowed assets alongside the siloed debt. These constraints explain different failures, so the deployed market’s actual settings determine which one applies.
Reserve liquidity and caps
A reserve is the market’s pool for a particular asset. Its available liquidity and borrowing cap can prevent a loan even when the account has unused collateral capacity.
A configured V3 borrow cap blocks new borrowing that would put the reserve’s total debt for that asset above the cap. A request that exceeds the remaining cap cannot proceed merely because its collateral is sufficient. Available liquidity imposes a separate constraint: the reserve needs transferable assets to fund the requested loan. Repayments can replenish liquidity, while new borrowing or withdrawals can reduce it.
A supply cap instead constrains additional deposits. It can block a proposed collateral top-up without removing an existing supplied balance.
Frozen reserves, pauses and oracle protections
A frozen V3 reserve blocks new supply and borrowing. A pause can also block operations that remain possible during a freeze, including repayment or withdrawal of the affected reserve.
V3.6 freezing also applies zero-LTV restrictions, and unfreezing does not by itself restore the previous LTV treatment. Separately, deployments that use a sequencer-aware oracle sentinel can suspend borrowing during an outage and the configured recovery period. Extra collateral does not override these restrictions. A displayed market price also cannot substitute for the valuation that the protocol uses. Resubmission becomes meaningful only when the relevant reserve permission, collateral parameter or oracle protection allows the action.
Collateral reductions that fail despite visible balances
Disabling or withdrawing collateral can fail when the resulting position would breach its required health factor. A supply balance therefore does not describe the amount that an indebted account can freely remove. When an account has debt and both zero-LTV and positive-LTV collateral enabled, V3 zero-LTV rules can require clearing the zero-LTV collateral before withdrawing or transferring positive-LTV collateral. Removing zero-LTV collateral may itself require debt reduction if that collateral still supports liquidation health. Withdrawal additionally requires available reserve liquidity. These conditions explain why restoring borrowing capacity, improving health factor and withdrawing funds are separate outcomes.
The account record before another attempt
A resolved collateral problem leaves evidence in the account that matches the intended correction. Collateral activation changes its enabled status; repayment reduces the relevant debt. An interface notification alone does not establish either result.
Before another borrow attempt, the verification record should include the correct account and market, effective collateral settings, remaining debt and requested asset’s permissions. The projected health factor describes the proposed position, while liquidity and cap availability describe whether the reserve can fund it. If those values remain unchanged after a failed request, repeating the request leaves the same obstacle in place.
Recovery remains conditional on the cause. Collateral activation or repayment cannot lift a market-wide pause or freeze, and a permission change cannot replenish missing reserve liquidity.
Questions people ask about Aave collateral
Can transferred aTokens leave my borrowing power unchanged?
Yes, receiving aTokens does not necessarily enable their underlying asset as collateral. Under V3.6 rules, aToken transfers do not automatically activate collateral for the recipient. The receiving account must satisfy the applicable collateral conditions, and its recorded collateral status determines whether the balance contributes borrowing power.
Does disabled collateral still earn supply interest?
Disabling collateral use does not remove the supplied position or independently stop its supply interest. Interest follows the reserve’s supply rate and accounting. A balance can therefore grow while contributing no borrowing capacity. Collateral eligibility, available borrowing and accrued supply interest describe separate properties of that position.
Where does collateral appear when a supply transaction names another beneficiary?
The supply position belongs to the beneficiary specified by the transaction. In V3, supplying on behalf of another address credits the corresponding aTokens to that address. The wallet that sent the underlying tokens does not receive collateral capacity from that supply merely because it paid for the transaction.
Is a missing health factor evidence that my collateral deposit failed?
A missing or infinite health factor can reflect an account with no debt. Health factor measures collateral coverage relative to borrowing, so an account without debt has no ordinary finite ratio to display. The supplied balance and collateral status provide the relevant evidence for whether the deposit exists and supports borrowing.
Could liquidation explain a lower collateral balance and lower debt together?
Liquidation can reduce collateral and debt in the same transaction. A liquidator repays eligible debt and receives collateral, including the applicable liquidation bonus. Check the recorded transaction type: repayment with aTokens can also reduce supplied assets and debt together. Repayment using wallet-held underlying tokens does not itself reduce the supplied balance, while a price movement changes valuation without directly removing tokens.
How does a higher borrowing rate affect collateral capacity?
A higher borrowing rate increases how quickly interest adds to outstanding debt. With collateral value and risk parameters unchanged, that growing debt reduces unused borrowing capacity over time. The rate change does not itself change the collateral’s LTV, and its effect depends on the debt balance and how long interest accrues.