Defiant

Zero

USDC

would

Aave

<a href="https://x.com/Aave" rel="noopener noreferrer nofollow">@Aave</a> has unfrozen all lending markets on its V3 and V4 deployments, days after a security breach at <a href="https://x.com/Binance" rel="noopener noreferrer nofollow">@Binance</a> prompted an emergency freeze across the protocol. The protocol says its smart contracts were not affected and that positions stayed fully collateralized throughout.
Aave said that during the freeze only new deposits and borrows were paused, while withdrawals and repayments continued as normal, according to <a href="https://panews.io/articles/01a18d1d-d013-7449-96aa-6ec3ae7d8cd8" rel="noopener noreferrer nofollow">PANews</a>.
<h2 id="nine-assets-remain-barred-as-collateral">Nine Assets Remain Barred as Collateral</h2>
Reopening the markets does not restore full functionality. As an ongoing precaution, <cite>the loan-to-value ratio (LTV) of USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUT, PAXG and OP will temporarily remain at 0</cite>, meaning they cannot be used as collateral for new borrowing. The Defiant reports that <a href="https://thedefiant.io/news/defi/aave-reopens-markets-but-keeps-nine-assets-at-zero-ltv" rel="noopener noreferrer nofollow">the restrictions apply wherever the assets are listed</a>, with different rules for existing V3 and V4 positions.
An LTV of 0% stops an asset from backing new loans. It reduces the chance that stolen or volatile tokens could be used to draw liquidity from the protocol, and it limits the risk of bad debt if prices move sharply.
<h2 id="why-aave-froze-its-markets">Why Aave Froze Its Markets</h2>
According to Aave's own governance forum post, its risk teams <a href="https://governance.aave.com/t/binance-hot-wallet-exploit-aaves-response/25954" rel="noopener noreferrer nofollow">joined Aave Labs, TokenLogic and Certora in a joint response group within 10 minutes of the first reports</a>. They chose a market-wide freeze because the exploiter could swap stolen funds into any listed asset, so freezing only the stolen tokens would have left other routes open. The guardian can also reverse a freeze, whereas cutting supply caps would have needed a governance vote and about five days to restore.
In total, <cite>175 reserves were frozen on Aave V3 across 16 networks and 117 on Aave V4 across four networks</cite>. Risk provider LlamaRisk reported that a wallet linked to the exploiter <cite>deposited 60 million USDT and borrowed 19,762 Wrapped Ether, worth about $44.6 million at the time</cite>, as covered by <a href="https://www.tradingview.com/news/cointelegraph:b8e523a16094b:0-live-updates-binance-says-3b-in-crypto-frozen-in-connection-to-hack/" rel="noopener noreferrer nofollow">Cointelegraph</a>. The transaction used Aave's standard borrowing functions and did not involve an exploit of its lending contracts.
Onchain analytics firm Bitquery said the hacker's USDT deposit on Aave remained unfrozen, but that Aave's USDT pool was nearly empty on the morning of 30 October, <a href="https://bitquery.io/investigations/binance-hack-who-profited" rel="noopener noreferrer nofollow">limiting what could be withdrawn to about $3,185</a> at the time of its measurement. That figure changes as lenders add or remove funds.
The wider Binance incident is still developing. Binance has estimated that roughly $6.3 billion in assets were affected, with around $3 billion frozen with the help of industry partners, according to <a href="https://crypto.news/elon-musk-warns-ai-agents-could-exploit-crypto-after-binance-hack/" rel="noopener noreferrer nofollow">crypto.news</a>.
Sources
<ul>
 <li><a href="https://panews.io/articles/01a18d1d-d013-7449-96aa-6ec3ae7d8cd8" rel="noopener noreferrer nofollow">PANews: Aave unfreezes all V3 and V4 markets</a></li>
 <li><a href="https://governance.aave.com/t/binance-hot-wallet-exploit-aaves-response/25954" rel="noopener noreferrer nofollow">Aave Governance: Binance Hot Wallet Exploit, Aave's Response</a></li>
 <li><a href="https://thedefiant.io/news/defi/aave-reopens-markets-but-keeps-nine-assets-at-zero-ltv" rel="noopener noreferrer nofollow">The Defiant: Aave Reopens Markets but Keeps Nine Assets at Zero LTV</a></li>
</ul>

Aave Unfreezes V3 and V4 Lending Markets After Binance Hack, Keeps Nine Assets at 0% LTV

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