Aave Reopens V3 and V4 Markets, Keeps LTV at Zero for Nine Assets
Aave has reopened all V3 and V4 markets after a precautionary freeze linked to the Binance hot-wallet hack. Deposits and borrowing are available again, while withdrawals and repayments had remained open during the freeze. Aave said its contracts were unaffected and positions remain overcollateralised. However, USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUT, PAXG and OP will temporarily remain at a loan-to-value (LTV) ratio of zero. These assets cannot be used as collateral for new borrowing, limiting some stablecoin-backed and leveraged strategies. Binance confirmed the hot-wallet incident and said it would cover losses with company funds and its SAFU fund. The move restores access to Aave markets but keeps tighter collateral controls in place as the incident is assessed.
Neutral
The immediate market impact is broadly neutral. Reopening Aave V3 and V4 restores access to deposits and borrowing, reducing the disruption caused by the precautionary freeze. Aave also reported no contract impact and said positions remain overcollateralised, which helps contain concerns about protocol solvency. However, setting LTV to zero for nine assets—including USDT and USDC—restricts new borrowing against commonly used collateral and may prompt affected users to switch collateral, repay debt or adjust leveraged positions. Similar precautionary DeFi risk controls after security incidents have often caused short-lived liquidity and volatility concerns, even when protocols themselves were not exploited. In the short term, traders may monitor Aave borrowing activity, stablecoin liquidity and collateral rates for signs of stress. In the longer term, the incident may reinforce scrutiny of hot-wallet security, collateral concentration and DeFi exposure to centralised exchanges. The article provides no evidence of losses at Aave or a lasting market impairment, so a directional bullish or bearish call is not justified.