A new Aave Request for Comment proposes winding down the lending protocol's V3 markets across six chains. The plan targets $98.1 million in supplied assets and $15.6 million in outstanding debt, aiming to consolidate liquidity and reduce operational overhead. The action follows recommendations from risk service provider LlamaRisk.
The targeted V3 instances operate on Sonic, Scroll, zkSync, Metis, Soneium and Aptos, covering 50 low-use reserves and 21 matured Pendle Principal Tokens. Offboarded assets include XRP, ETH and SOL, among others.
LlamaRisk, in collaboration with other Aave service providers, recommended the wind-down, citing low utilization and reduced capital efficiency across these deployments. Most of the targeted instances had already seen preliminary offboarding actions.
The proposal requires users on affected chains to migrate positions. Borrowers and liquidity providers must withdraw assets or repay debt before the markets are shuttered, centralizing liquidity onto more active Aave deployments.
Winding down a market involves freezing deposits, disabling borrowing and gradually reducing interest rates to encourage repayment and withdrawals—minimizing the risk of bad debt and liquidations during the transition. The matured Pendle PTs represent fixed-yield tokens whose underlying principal is now redeemable.
At $98.1 million in supplied assets, the affected markets represent a small fraction of Aave's total TVL, which spans billions across Ethereum mainnet and other leading chains. The cleanup focuses on smaller, less active V3 instances to optimize resource allocation and reduce security surface area.
The ARFC must clear Aave's DAO governance process, with token holders voting on the proposal and a supermajority required for execution. A successful vote triggers the smart contract changes needed for the wind-down.
Removing these markets is likely to reduce token emissions allocated to liquidity incentives on the affected chains, potentially re-routing capital to more active Aave pools with deeper liquidity and higher yields.
Users moving funds will likely use existing bridge infrastructure to transfer assets to more active Aave markets or other protocols, which could produce a temporary uptick in bridge flows from the six chains as capital reallocates.
