A Small Pricing Error Triggered Major Liquidations

The Aave lending protocol determines the value of collateral used by borrowers through price oracles. If the collateral value falls below a certain threshold, the system automatically liquidates positions to protect lenders. In this event, the actual value of the collateral did not drop. However, the system miscalculated the price and treated it as if it had fallen. The issue originated from a mismatch between two internal settings in Aave’s CAPO (Capped Asset Price Oracle) security mechanism. This mechanism normally exists to limit sudden or manipulative price spikes.

However, the lack of synchronization between the two settings caused the following:

• One parameter updated only partially due to a rate limit
• The other continued operating as if it had fully updated

As a result, the system calculated the price of wstETH approximately 2.85% lower than its real value. For most users, a 2.85% difference might not be significant. But for investors borrowing close to their collateral limits or using high leverage, this small discrepancy became critical. Consequently, 10,938 wstETH across 34 accounts were automatically liquidated and sold to cover outstanding loans. According to a report by Chaos Labs, liquidation bots monitoring such opportunities generated approximately 499 ETH in profit from the event.

The Aave Protocol Did Not Suffer Financial Loss

Although the incident caused serious losses for some users, the Aave protocol itself did not suffer any financial damage. No loans remained unpaid, and the protocol’s reserves were not used. This indicates that the core risk management and liquidation mechanisms functioned as designed. Stani Kulechov, founder and CEO of Aave, commented on the situation:

“There was no impact on the Aave Protocol.”

Nevertheless, the Aave team announced that a compensation plan would be launched to cover the losses experienced by affected users. The protocol’s management stated that necessary steps would be taken to protect community trust and reimburse users.

Compensation Process for Users

Aave managed to recover part of the funds generated during the liquidation process. Through the BuilderNet refund mechanism, the protocol retrieved:

• 141.5 ETH
• 13 ETH in transaction fees

These funds will be distributed directly to the affected users. The remaining 345 ETH loss will be covered by the Aave DAO treasury, ensuring that the losses of liquidated users are fully reimbursed. Omer Goldberg confirmed that all affected users will be compensated:

“Every affected user will be fully reimbursed. The Aave DAO is finalizing the repayment plan.”

The incident highlights how even minor configuration errors in DeFi protocols can lead to significant financial consequences. Although the protocol itself did not suffer losses, the $26 million liquidation event demonstrates the critical importance of risk management systems and price oracle accuracy in decentralized finance. At the same time, Aave’s quick response and commitment to fully compensating affected users helped limit negative market reaction and maintain confidence in the protocol.

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Controversy Over Aave Labs’ Funding

A report released by Marc Zeller, founder of ACI, an organization contributing to the Aave ecosystem, revealed striking details about Aave Labs’ funding history. According to the report, Aave Labs has received roughly $86 million in total funding since 2017, including ICO proceeds, venture capital, and DAO grants. During the 2017 ICO, the founding team held 23% of LEND tokens, which were later converted to AAVE tokens at a 100:1 ratio. The report also notes that Labs had around $48.7 million in capital before receiving DAO funds and subsequently obtained approximately $37.4 million in grants from the DAO. Despite this, Labs requested an additional $51 million under the “Aave Will Win” proposal, sparking further debate within the community.

Product Failures Beyond Core Protocol

The most striking part of the report relates to the performance of products outside Aave’s core lending protocol. Allegedly, all six independent products developed outside the core protocol either failed or did not achieve the expected profitability. The Horizon project, focused on real-world assets (RWA), was highlighted. Although Horizon was said to exceed $1 billion in size at launch, it actually had about $135 million in RWA collateral, largely concentrated in a single asset. Launched in August 2025, the project reportedly generated only about $216,000 in DAO revenue, while incentives and costs reached $5.25 million, resulting in a roughly 24:1 negative return.

Developer Departures and Governance Issues

The report also mentions that early core developers involved in Aave V1, V2, and V3.0 left Labs between 2021–2022. These departures are claimed to have created a major disruption in the technical vision and product development process. V3.0, developed under Labs leadership, was the last major release; subsequent versions have been largely directed by DAO service providers and external teams. This has raised concerns that technical leadership within the project has gradually dispersed.

Additionally, the Horizon proposal’s approval heavily relied on a single large delegation address, raising questions about governance. Some community members argue that concentrating voting power in a few addresses undermines decentralization principles. The allocation of millions in funding by a limited number of large voters has once again brought fund efficiency and transparency into focus.

Transparency and Fund Management Debates in the Aave Community

These developments highlight how critical governance transparency and fund management are in DeFi projects. With $17.5 million in new grant proposals currently under consideration, debates within the community are expected to intensify. Analysts note that this internal tension could impact Aave’s perception and AAVE token price in the short term, but strengthening transparency and governance practices could make the ecosystem more resilient in the long run.

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BGD Labs Ends Its Partnership with Aave

As one of Aave’s key technical developers, BGD Labs stated in its official announcement that its current service agreement will expire on April 1, after which it will step down from its active role in the project. The firm has played a central role in Aave’s technical infrastructure and development processes for nearly four years. BGD Labs noted that it had informed the community in advance to ensure a smooth transition and will continue fulfilling its responsibilities until the contract concludes. The company will support the completion of ongoing projects such as Aave v3, the Umbrella security system, chain expansions, and new asset integrations. It also announced that comprehensive documentation and maintenance guides will be published to facilitate a seamless handover of ongoing technical work.

Founded in 2022, BGD Labs played a significant role in building and maintaining Aave’s technical backbone. The firm was particularly instrumental in the development and ecosystem integration of Aave v3, which it described as the “crown jewel” of the ecosystem. BGD Labs also emphasized its active involvement in establishing the protocol’s governance infrastructure, operational procedures, and security mechanisms. Although the company stated that Aave’s core systems are now strong and sustainable, it cited organizational changes as the reason for ending the partnership.

Reason for the Split: Governance and Decentralization Debate

The decision by BGD Labs is reportedly tied to recent organizational changes and differences in governance structure within the Aave ecosystem. In particular, Aave Labs preparing to take on a more centralized and decisive role in the development of Aave v4 has been highlighted as a key factor. Aave Labs recently proposed directing 100% of the protocol’s revenues to the DAO treasury and requested additional funding for development activities. These proposals triggered significant debate within the ecosystem, making disagreements over DAO governance and resource allocation more visible.

BGD Labs argued that the new structure could create an “asymmetric organizational scenario” and pose potential risks to the principle of decentralization. According to the firm, concentrating brand power, communication channels, and governance voting influence within a specific structure may contradict the distributed, community-driven philosophy that underpins DeFi projects. It also warned that reducing the influence of independent contributors in decision-making processes could weaken long-term motivation among developers and technical teams.

Following the announcement of the separation, AAVE’s price experienced a sharp pullback. The market interpreted the departure of one of the core developer teams as a governance risk, increasing uncertainty and selling pressure among investors. Since changes in technical teams and governance structures can directly impact prices in DeFi projects, this development led to heightened short-term volatility and downward price movement for AAVE.

Tensions During the Aave v4 Process

In its statement, BGD Labs also mentioned that the development process of Aave v3 was occasionally contentious and that sufficient collaboration did not materialize during the design phase of Aave v4. The company claimed that contributors were reduced to advisory roles without being fully involved in incentive and design processes. Arguing that this setup does not offer a sustainable long-term working model, BGD Labs described its departure as a strategic decision. The exit of one of Aave’s core technical contributors has created significant impact within the DeFi market. The sudden drop in AAVE’s price has made investors more cautious about the project’s governance and future direction. In the coming period, the steps taken by Aave’s leadership and community will be decisive for both the protocol’s development and AAVE’s price performance.

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A Gateway From AAVE to Traditional Users

Until now, AAVE has mostly served crypto-native users. However, the new Apple Store application will give AAVE the chance to engage with a much broader global audience and make DeFi products more accessible for mobile users. The main goals of the app can be summarized as follows:

• Offering users higher yields compared to traditional savings accounts
• Presenting DeFi yield models through a simple and user-friendly interface
• Providing an easy entry point for users who are unfamiliar with crypto
• Expanding the reach of the AAVE protocol on a global scale

It is stated that the application will present AAVE’s liquidity pools to end-users in a simplified and easy-to-understand format.

What Is Aave (AAVE)?

Aave is a decentralized DeFi protocol that allows users to lend their crypto assets and earn interest, borrow against collateral, and execute various investment strategies. The protocol was originally launched as ETHLend in 2017 and used a peer-to-peer (P2P) model. In 2018, it rebranded to Aave and evolved into a much more efficient, pool-based liquidity model. “Aave” means ghost in Finnish.

Initially operating only on Ethereum, Aave is now available on multiple networks including Polygon, Avalanche, Fantom, Arbitrum and Optimism. One of Aave’s standout features is its liquidity pool mechanism: lenders deposit assets into pools, and borrowers can instantly draw loans from these pools.

A Strategic Transformation: DeFi Goes Mainstream

According to analysts, this initiative shows that AAVE aims not only to serve crypto enthusiasts but also to reach the wider consumer base accustomed to traditional banking apps. This could create two major advantages for the protocol:

• A potential increase in AAVE’s total liquidity
• The opportunity to attract traditional investors into the DeFi universe

This move is also seen as a strong step toward the long-awaited “mainstream adoption” goal within the DeFi sector.

A New Bridge Between DeFi and Mobile Finance

AAVE’s decision to launch a high-yield financial app on the Apple Store could mark a major breakthrough for the DeFi ecosystem. It represents the beginning of a new era for both institutional and retail users. This initiative has the potential to accelerate DeFi adoption, attract fresh liquidity to the AAVE ecosystem, and spark new competition in the mobile finance space.

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Aavenomics: The Start of a New Era for Aave

The comprehensive upgrade known as “Aavenomics” aims to redesign Aave’s long-term financial framework. The proposal, led by the Aave Chan Initiative (ACI), envisions a new decentralized governance structure that will support Aave’s continued growth and maturity as a DeFi protocol.

The $50 Million Buyback Plan: How It Works

According to the proposal, the Aave Finance Committee will use protocol-generated revenue to repurchase AAVE tokens from secondary markets. These repurchased tokens will then be transferred to the ecosystem reserve, with the goal of reducing circulating supply, boosting investor confidence, and actively reinvesting protocol income.

The plan will begin with a weekly purchase rate of $1 million, following a conservative strategy focused on fund security. According to Zeller, this model mirrors a shareholder dividend system, establishing a sustainable revenue framework within the DeFi ecosystem.

Umbrella Security Module: A New Layer of Protection

As part of the Aavenomics upgrade, Aave plans to launch a new risk management framework called the Umbrella Security Module. This system is designed to reduce default risks and provide insurance-like protection within borrowing processes. Operating automatically through smart contracts, the module will enhance the resilience and liquidity security of the protocol.

Aave generated approximately $500 million in revenue last year. With the new system, these revenues will no longer remain idle in the treasury but will instead be redistributed to the community, reinforcing economic sustainability within the ecosystem.

Setting a New Standard in the DeFi Ecosystem

This proposal underscores the growing importance of restructuring token economies in the DeFi landscape. Similar buyback and protection models have been successfully implemented by MakerDAO and Curve Finance, helping stabilize token price volatility and improve market confidence.

According to analysts, if the Aave proposal is approved:

• The supply-demand balance of the AAVE token will strengthen,
• Long-term price stability will be supported, and
• The protocol’s revenue model will become more attractive to investors.

Market Reaction and Potential Impact

The announcement has been well received by the market, especially amid heightened macroeconomic uncertainty. Following the news, AAVE’s price surged by 8%, rising from $215 to $219. Investors view this move as a validation of AAVE’s intrinsic value and a sign of growing protocol maturity.

While short-term speculative movements may occur, analysts expect this model to boost revenue stability and investor confidence in the long run.
The proposal is currently in the community voting stage.

Aave Redefines the Future of DeFi Economics

The Aave DAO’s $50 million AAVE buyback proposal represents more than just a financial strategy — it marks a new paradigm shift in the evolution of decentralized finance (DeFi).

With the Aavenomics upgrade, Aave is expected to further strengthen its position as one of the most trusted and resilient protocols in the DeFi ecosystem.
This model has the potential to set a new economic standard not only for the Aave ecosystem but also for the entire DeFi market in the long run.

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In its report for Q4 2024, Grayscale highlighted 20 altcoins with growth potential, taking into account market trends and key factors specific to each token. The list now includes 6 new altcoins: SUI, TAO, OP, HNT, CELO, and UMA. However, RENDER, MNT, RUNE, PENDLE, ILV, and RAY have been removed from the previous list.

According to Grayscale, the altcoins with high potential for the fourth quarter are as follows:

• Bitcoin (BTC)
• Ethereum (ETH)
• Solana (SOL)
• Toncoin (TON)
• Chainlink (LINK)
• Near (NEAR)
• Uniswap (UNI)
• Sui (SUI)
• Bittensor (TAO)
• Stacks (STX)
• Aave (AAVE)
• Optimism (OP)
• Arweave (AR)
• Maker (SKY)
• Helium (HNT)
• Lido DAO (LDO)
• Akash Network (AKT)
• Aerodrome (AERO)
• Celo (CELO)
• UMA Protocol (UMA)

Additionally, it was stated, “This quarter, we have removed the following projects from the Top 20: Celo. Grayscale Research continues to value each of these projects, and they remain important elements of the crypto ecosystem. However, we believe the revised Top 20 list may offer more attractive risk-adjusted returns for the upcoming quarter.

Investing in the crypto asset class involves risks, including some unique to the crypto space, such as smart contract vulnerabilities and regulatory uncertainty. Furthermore, all assets in the Top 20 have high volatility and carry high risks, making them unsuitable for all investors. In light of the risks associated with the asset class, any investment in digital assets should be considered within the context of a portfolio and with the investor’s financial goals in mind.”

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Bitcoin’s fall below $60,000 led to a wave of selling pressure that impacted the altcoin market significantly. Despite this, some projects managed to rise, fueled by news, trends, and technical analyses. Let’s explore which altcoins thrived in August.

Helium (HNT)

Helium (HNT) made headlines with its ecosystem developments and saw a notable surge. Throughout August, HNT achieved a remarkable 73% increase, making it a favorite among crypto miners. The rising activity within the Helium Mobile network could keep HNT among the top performers for a while longer.

Sui (SUI)

Gaining fame with its initial airdrop, Sui (SUI) has captured a strong upward trend. Despite the downturn in BTC and ETH prices, SUI saw a 38% rise in August, positioning itself as a promising player in the upcoming bull market. Positive and significant news from its ecosystem could further bolster its position.

Sats (SATS)

As one of the most notable BRC20 projects, Sats (SATS) showed impressive price movements. While Bitcoin struggled, SATS surged, ending August with a 35% gain. The recent halving phase contributed to this spike, allowing SATS to make a significant comeback.

Aave (AAVE)

Known for its association with decentralization, Aave (AAVE) experienced a notable rise towards the end of August. Increased attention to decentralization concepts, spurred by FUD news, benefited AAVE. With a 27% increase, AAVE secured its spot as the fourth top performer.

Artificial Superintelligence Alliance (FET)

Initially, the Artificial Superintelligence Alliance, combining AGIX and OCEAN, had a weak start. However, following NVIDIA’s positive earnings report, FET saw a significant boost. Concluding August with a 24% gain, FET secured its place as the fifth top altcoin of the month.

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The post August’s Top 5 Altcoins: Surging Amidst Market Turmoil appeared first on Coin Engineer.

Bitcoin (BTC) continues to be priced at $60,340 after reacting to the resistance level of $61,320. In the past hours, the price increased with volume and positioned itself above the resistance. However, if it does not close above the $61,320 level on the daily candle, the next support level we face is $60,200.

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Bitcoin (BTC): The BTC/USDT pair has lost 1.55% in the last 24 hours and is currently trading at $60,340. The resistance levels for BTC are first at $61,320, and then at $62,445. The support levels are at $60,200 and below that, at $58,400.

Ethereum (ETH): The ETH/USDT pair has lost 2.97% in the last 24 hours and is currently trading at $2,600. The resistance levels for ETH are first at $2,720, and then at $2,820. The support levels are at $2,590 and below that, at $2,360.

Ripple (XRP): The XRP/USDT pair has lost 3.60% in the last 24 hours and is currently trading at $0.6011. The resistance levels for XRP are first at $0.6432, and then at $0.6720. The support levels are at $0.5935 and below that, at $0.5741.

AAVE (AAVE): The AAVE/USDT pair has lost 3.67% in the last 24 hours and is currently trading at $95.11. The resistance levels for AAVE are first at $97.45, and then at $100.89. The support levels are at $92.35 and below that, at $90.04.

Dogecoin (DOGE): The DOGE/USDT pair has lost 0.39% in the last 24 hours and is currently trading at $0.1039. The resistance levels for DOGE are first at $0.1120, and then at $0.1205. The support levels are at $0.09866 and below that, at $0.09155.

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Bitcoin (BTC) continues to trade at $62,880, having broken through the $62,450 resistance level. After dropping to the $56,550 level, it gained volume and quickly rose to its current level within days. If it closes daily at the $62,450 level in the first phase, the next target will be the $63,450 resistance level.

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Bitcoin (BTC): The BTC/USDT pair has gained 4.25% in the last 24 hours and is currently trading at $62,880. The resistance levels for BTC are first at $63,450 and then at $64,270. The support levels are at $62,450 and below that at $61,320.

Ethereum (ETH): The ETH/USDT pair has gained 4.63% in the last 24 hours and is currently trading at $3,340. The resistance levels for ETH are first at $3,360 and then at $3,400. The support levels are at $3,300 and below that at $3,260.

Arweave (AR): The AR/USDT pair has gained 4.14% in the last 24 hours and is currently trading at $26.636. The resistance levels for AR are first at $28.502 and then at $29.557. The support levels are at $25.177 and below that at $23.280.

Ripple (XRP): The XRP/USDT pair has gained 2.14% in the last 24 hours and is currently trading at $0.5324. The resistance levels for XRP are first at $0.5494 and then at $0.5741. The support levels are at $0.5305 and below that at $0.5060.

AAVE (AAVE): The AAVE/USDT pair has gained 3.10% in the last 24 hours and is currently trading at $103.80. The resistance levels for AAVE are first at $106.97 and then at $114.72. The support levels are at $100.89 and below that at $97.45.

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Bitcoin (BTC) continues to trade at $65,250 after reaching the $64,260 support level. In the past hours, the price rose to $65,720, surpassing the resistance level. However, if it doesn’t close above $65,500 in the daily candle, the next support level is $64,260.

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Bitcoin (BTC): The BTC/USDT pair has lost 0.46% in the last 24 hours and is currently trading at $65,250. The resistance levels for BTC are first at $65,500 and then at $66,000. The support levels are $64,260 and, below this region, $63,450.

Ethereum (ETH): The ETH/USDT pair has lost 0.06% in the last 24 hours and is currently trading at $3568. The resistance levels for ETH are first at $3655 and then at $3735. The support levels are $3530 and, below this region, $3480.

Solana (SOL): The SOL/USDT pair has lost 4.84% in the last 24 hours and is currently trading at $133.80. The resistance levels for SOL are first at $137.82 and then at $141.16. The support levels are $132.90 and, below this region, $124.90.

Aave (AAVE): The AAVE/USDT pair has gained 2.2% in the last 24 hours and is currently trading at $86.95. The resistance levels for AAVE are first at $87.06 and then at $90.04. The support levels are $85.00 and, below this region, $81.47.

Binance Coin (BNB): The BNB/USDT pair has lost 0.04% in the last 24 hours and is currently trading at $599.7. The resistance levels for BNB are first at $600 and then at $607.1. The support levels are $586 and, below this region, $581.4.

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