Overview of AAVE V3 new features
A step-by-step walkthrough
The user can access the V3 Markets in the dropbox selection. After the selection, the page will load the assets available for supplying and borrowing in this specific market.
This section will focus on the new features that the V3 Markets introduced. To check how to supply or borrow an asset, please check the landing page walkthrough.
New assets can be listed as isolated in Aave protocol V3. Borrowers supplying an isolated asset as collateral cannot use other assets as collateral (though they can still provide it to the protocol to receive yield).
How to enter isolation mode
To enter into isolation mode, the user must supply the asset to the protocol and activate it as collateral, clicking on the toggle and enabling it on the popup.
After the isolation mode is activated, no other asset can be added as collateral, and the list of assets available for borrowing is also updated.
How to exit isolation mode
Click the slider button to disable the isolated asset to exit isolation mode from the Your Supplies section. Now all other assets are available again.
Efficiency Mode (E-mode)
The E-mode feature maximizes capital efficiency when collateral and borrowed assets have correlated prices. For example, DAI, USDC, and USDT are stablecoins pegged to USD. These stablecoins are all within the same E-mode category. Accordingly, a user supplying DAI in E-mode will have higher collateralization power when borrowing assets like USDC or USDT.
Only assets of the same category (for example, stablecoins) can be used as collateral and be borrowed in E-mode.
How to enter E-mode
To enter E-mode from the dashboard, the user must go to the dropdown menu under Your Borrows, where he will find an “Enable E-mode” button. Initially, the switch to enable E-mode will indicate that E-mode is “disabled.” Next, click “Enable E-mode” and follow the instructions in the popup. Once all the steps are done, the user will have enhanced borrowing power (i.e., up to 97.5% LTV) within E-mode. However, only assets within the same category can be borrowed (for example, stablecoins).
Obs: The E-mode can be enabled even if the isolation mode is active.
How to exit E-mode
The borrowed power used can’t be higher than the standard mode threshold for the user to exit E-mode and enable different assets to borrow. The system won’t let the user disable the E-Mode, as this action would lead to an instant liquidation of the loan. Therefore, the user must bring the borrowed power to a value under the threshold for the option to be enabled on the popup.
After successfully exiting the E-mode, the other assets are available for borrowing.
AAVE V3 introduced the possibility of different tokens being added as rewards to incentivize actions inside the market.
When the market has these rewards, they are shown on the APY column in the Supply and Borrow sections. To claim the rewards accrued, the user must click on the Claim button in the Available rewards section. Then, the contract will send them directly to the user’s wallet.