Aave: All V3 and V4 markets have been unfrozen, and the LTV of some assets remains at 0
Aave posted an update on the handling progress after the Binance incident, saying that all markets on Aave V3 and V4 have now been unfrozen. Previously, after the initial reports of the incident emerged, Aave froze the markets as a precautionary measure, suspending new deposits and borrowing, while withdrawals and repayments continued normally. Aave emphasized that its contracts were not affected by the incident, and positions have always remained sufficiently collateralized.
As an ongoing precautionary measure, the loan-to-value ratio (LTV) for USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUT, PAXG and OP will temporarily remain at 0, so these assets cannot currently be used as collateral to support new borrowing. Aave founder Stani Kulechov later confirmed that lending functions have been reopened and that positions remain overcollateralized.
This handling separates market freezing from collateral parameter adjustments: new deposits and borrowing have resumed, but specific assets, which overlap with assets held by the attacker address cluster, have temporarily lost the ability to serve as collateral for new borrowing. In terms of capital flows, the precautionary freeze restricted the room for potentially stolen funds to further borrow and convert through Aave. After the unfreeze, keeping LTV at 0 maintains constraints on new leverage for high-risk assets; the beneficiary is the protocol’s overall risk isolation, while the cost is borne by the relevant asset holders, who temporarily lose the new collateral function.
Original source:
Title: Aave update post on market unfreezing after the Binance incident
Posted by: Aave (@aave)
Publication date: 2026-10-30
URL: https://x.com/aave/status/2116167595237720167
Source nature: Official project post
Verification status: Full text of the original post and subsequent replies read
Supporting content: All markets on V3 and V4 have been unfrozen; the earlier precautionary freeze suspended new deposits and borrowing, while withdrawals and repayments remained normal; contracts were not affected and positions were sufficiently collateralized; the LTV of certain assets is temporarily kept at 0
ABAB AI Insight
Aave quickly took precautionary measures after the roughly $6.3 billion Binance theft incident, first freezing all DAO-operated V3 and V4 markets to suspend new deposits and borrowing, and then unfreezing them after confirming that its contracts were not affected. Risk service provider LlamaRisk had previously recorded that wallets related to the attacker had deposited about $60 million of USDT into Aave V3 Ethereum Core and borrowed about 19,762 WETH. This unfreeze preserves the LTV=0 setting for specific assets, indicating that risk control has shifted from a full halt to targeted constraints.
In terms of capital flows, the attacker used Aave to convert traceable stablecoins into unfreezable ETH, and the protocol cut off the possibility of further leverage amplification through freezing and LTV adjustments. Unlike directly suspending all markets, Aave kept withdrawal and repayment channels open, allowing users to proactively reduce risk while imposing new collateral restrictions on assets overlapping with the attacker address cluster. This structure prioritizes protocol risk isolation over short-term liquidity convenience.
Comparable cases include DeFi protocols using parameter adjustments, such as lowering collateral factors, rather than a complete shutdown to manage contagion risk after major exchange security incidents. Aave’s phased handling this time, first freezing and then unfreezing while retaining targeted LTV restrictions, reflects a more refined response coordinated by governance and risk service providers.
Specific judgment: given that Aave has confirmed its contracts were not affected, positions have always been sufficiently collateralized, and LTV=0 has been set for attacker-related assets, the protocol has moved from emergency freezing to conditional resumption; the key going forward is the duration of the LTV restriction and whether attacker-related positions, which are overcollateralized, will trigger liquidation, thereby affecting protocol liquidity and users’ borrowing capacity.
ABAB News · Cognitive Law
After precautionary freezing, targeted LTV adjustments turn a full suspension into asset-level risk isolation.
Keeping withdrawal and repayment channels open allows users to proactively reduce position risk.
Assets overlapping with the attacker address cluster are prioritized for restrictions on new collateral functionality.