Aave's proposal targets small-scale assets with a target amount of US$98 million...

What assets does Aave plan to remove?

Aave has proposed a governance plan to remove dozens of reserve pools with low adoption rates and close six smaller blockchain deployments. The move will affect approximately $98.1 million in supply assets and $15.6 million in outstanding debt. The review covered 50 low-adoption reserve pools and 21 expired Pendle principal tokens in 11 Aave V3 deployments. At the same time, it is recommended to completely close the Aave markets on Sonic, Scroll, zkSync, Metis, Soneium and Aptos, which involves an additional 25 reserve pools. The removal of individual reserve pools involved approximately $85.3 million in supply assets and $11.5 million in debt. The full shutdown at six deployment levels involved an additional $12.8 million in supply assets and $4.1 million in borrowings.

Aave founder Stani Kulechov announced the proposal on Thursday. Risk services provider LlamaRisk made the recommendations after reviewing the agreement market against the proposed Aave Risk Framework. The action was not about the failure of a specific token, but rather applied a unified set of criteria to Aave's entire portfolio, assessing whether the activity and revenue generated by each reserve pool were sufficient to justify its operating and risk management costs.

Why did Aave remove low-usage markets?

Each borrowing reserve pool requires continuous infrastructure support to operate. Even if a market has low liquidity or revenue, Aave must maintain price predictors, clearing systems, supply and borrowing limits, monitoring processes, and governance support. As a result, a reserve pool with low adoption rates can create an unfavorable balance between revenue and risk. Lackluster markets are also more difficult to liquidate during periods of market volatility, increasing the risk of falling collateral values causing bad debts to occur on agreements. The proposal targets bridging assets that duplicate native tokens, Pendle PTs that have expired and no longer generate revenue, and small deployments where protocol revenue cannot cover maintenance costs. Removing duplicate or inactive markets reduces the number of trouble points that Aave contributors need to monitor. The closure of these six networks also shows that growth in deployments is no longer a primary goal. Aave seems more willing to eliminate markets that have failed to accumulate enough deposits, lending activity or fee income to support their continued operations.

Investor revelation

Aave is trading network coverage for stricter risk controls and lower operating costs. The proposal may make the agreement easier to manage, but affected users need to withdraw liquidity, repay debt or shift positions before market conditions become unfavorable.

How will the clearance process work?

Aave plans to gradually curb new activity rather than immediately close affected markets. For individual reserve pools, the agreement will freeze new uses, reduce supply and borrowing caps to one unit, and increase the reserve factor at which assets can still be lent out. A higher reserve factor means that a larger share of borrower interest will flow to the agreement rather than the supplier, making money less economically attractive to stay in the market. Reducing the cap to one unit will effectively block new deposits and loans while leaving time for existing users to exit. The six deployments marked for retirement will face more stringent measures. The reserve factor will rise to 99%, while the underlying borrowing rate will increase to encourage borrowers to repay debt and liquidity providers to withdraw assets. These settings are designed to reduce the size of the market without triggering forced liquidations. However, users who delay action may face higher borrowing costs, lower loan returns, or thinner liquidity due to other participants exiting first. The proposal requires governance approval before implementation. The timing of changes may also depend on open positions and whether users reduce debt and supply balances quickly enough.

How does this plan fit into Aave's new risk framework?

The reserve pool review follows the risk framework proposed following the approximately $292 million KelpDAO bridging vulnerability incident in June this year. The stolen rsETH was used as collateral for deposits, exposing Aave to bad debt risk and reigniting discussions about how the agreement would evaluate bridging assets and long-tail assets. Kulechov said the framework will guide asset listings, ongoing review and future removals on Aave V3, the upcoming Aave V4 and Aave Horizon. Even if no direct loss occurs, assets that fail to meet the required standards may be restricted or removed. Another proposal by LlamaRisk targets another group of long-tail reserve pools that face higher Chainlink price oracle risks. The plan will replace real-time market quotes with fixed-price adapters to reduce the possibility of unreliable or illiquid pricing triggering improper lending or clearing activity. Taken together, these proposals point to a more defensive operating model. Aave is seeking to reduce market exposure to weak liquidity, duplicate collateral, expired revenue products or infrastructure costs exceeding the revenue it generates. The short-term direct impact of the governance proposal on token value may be limited, but its long-term importance lies in whether Aave can reduce tail risk without harming market activities that may ultimately be profitable.