Aave V3 Architecture

Aave V3 Architecture

Aave V3 is a decentralized non-custodial lending protocol where users can supply assets to earn interest and borrow against collateral. This skill provides a high-level overview of the protocol architecture.

Overview

┌──────────────────────────────────────────────────────────────┐
│                      AAVE V3 ARCHITECTURE                    │
├──────────────────────────────────────────────────────────────┤
│                                                              │
│  ┌─────────────────────────────────────────────────────────┐ │
│  │                 PoolAddressesProvider                   │ │
│  │     Central registry for all protocol contracts         │ │
│  └─────────────────────────────────────────────────────────┘ │
│                              │                               │
│       ┌──────────────────────┼──────────────────────┐        │
│       ▼                      ▼                      ▼        │
│  ┌─────────┐          ┌─────────────┐        ┌───────────┐   │
│  │  Pool   │◄────────►│PoolConfig-  │        │ ACLManager│   │
│  │         │          │   urator    │        │           │   │
│  └────┬────┘          └─────────────┘        └───────────┘   │
│       │                                                      │
│       │  manages                                             │
│       ▼                                                      │
│  ┌─────────────────────────────────────────────────────────┐ │
│  │                    Reserves (Assets)                     │ │
│  │  ┌─────────┐  ┌─────────┐  ┌─────────┐  ┌─────────┐     │ │
│  │  │ aToken  │  │ Variable│  │ Interest│  │ Oracle  │     │ │
│  │  │         │  │DebtToken│  │RateStrat│  │         │     │ │
│  │  └─────────┘  └─────────┘  └─────────┘  └─────────┘     │ │
│  └─────────────────────────────────────────────────────────┘ │
│                                                              │
└──────────────────────────────────────────────────────────────┘

Core Components

PoolAddressesProvider

The central registry that stores addresses of all protocol contracts for a specific market.

interface IPoolAddressesProvider {
    function getPool() external view returns (address);
    function getPoolConfigurator() external view returns (address);
    function getPriceOracle() external view returns (address);
    function getACLManager() external view returns (address);
    function getACLAdmin() external view returns (address);
    function getPriceOracleSentinel() external view returns (address);
    function getPoolDataProvider() external view returns (address);

    // Generic address getter for custom identifiers
    function getAddress(bytes32 id) external view returns (address);
}

Pool

The main entry point for user interactions. All supply, borrow, repay, and withdraw operations go through the Pool.

interface IPool {
    // Core operations
    function supply(address asset, uint256 amount, address onBehalfOf, uint16 referralCode) external;
    function withdraw(address asset, uint256 amount, address to) external returns (uint256);
    function borrow(address asset, uint256 amount, uint256 interestRateMode, uint16 referralCode, address onBehalfOf) external;
    function repay(address asset, uint256 amount, uint256 interestRateMode, address onBehalfOf) external returns (uint256);

    // Collateral management
    function setUserUseReserveAsCollateral(address asset, bool useAsCollateral) external;

    // Liquidation
    function liquidationCall(address collateralAsset, address debtAsset, address user, uint256 debtToCover, bool receiveAToken) external;

    // Flash loans
    function flashLoan(address receiverAddress, address[] calldata assets, uint256[] calldata amounts, uint256[] calldata interestRateModes, address onBehalfOf, bytes calldata params, uint16 referralCode) external;
    function flashLoanSimple(address receiverAddress, address asset, uint256 amount, bytes calldata params, uint16 referralCode) external;

    // eModes
    function setUserEMode(uint8 categoryId) external;
    function getUserEMode(address user) external view returns (uint256);

    // Account data
    function getUserAccountData(address user) external view returns (
        uint256 totalCollateralBase,
        uint256 totalDebtBase,
        uint256 availableBorrowsBase,
        uint256 currentLiquidationThreshold,
        uint256 ltv,
        uint256 healthFactor
    );
}

PoolConfigurator

Admin contract for configuring reserves and protocol parameters.

interface IPoolConfigurator {
    // Reserve initialization
    function initReserves(ConfiguratorInputTypes.InitReserveInput[] calldata input) external;

    // Reserve configuration
    function setReserveBorrowing(address asset, bool enabled) external;
    function configureReserveAsCollateral(address asset, uint256 ltv, uint256 liquidationThreshold, uint256 liquidationBonus) external;
    function setReserveFreeze(address asset, bool freeze) external;
    function setReservePause(address asset, bool paused) external;
    function setReserveFactor(address asset, uint256 newReserveFactor) external;

    // Caps
    function setBorrowCap(address asset, uint256 newBorrowCap) external;
    function setSupplyCap(address asset, uint256 newSupplyCap) external;

    // eModes
    function setEModeCategory(uint8 categoryId, uint16 ltv, uint16 liquidationThreshold, uint16 liquidationBonus, string calldata label) external;
}

ACLManager

Access control manager for protocol roles.

interface IACLManager {
    function isPoolAdmin(address admin) external view returns (bool);
    function isEmergencyAdmin(address admin) external view returns (bool);
    function isRiskAdmin(address admin) external view returns (bool);
    function isFlashBorrower(address borrower) external view returns (bool);
    function isBridge(address bridge) external view returns (bool);
    function isAssetListingAdmin(address admin) external view returns (bool);
}

Reserve Data Structure

Each asset listed on Aave has associated reserve data:

struct ReserveData {
    // Configuration stored as bitmap
    ReserveConfigurationMap configuration;

    // Indexes (in ray - 27 decimals)
    uint128 liquidityIndex;          // Supply index for interest accrual
    uint128 variableBorrowIndex;     // Borrow index for interest accrual

    // Current rates (in ray)
    uint128 currentLiquidityRate;    // Current supply APY
    uint128 currentVariableBorrowRate; // Current borrow APY

    // Deficit tracking (V3.3)
    uint128 deficit;

    // Timestamps
    uint40 lastUpdateTimestamp;
    uint40 liquidationGracePeriodUntil;

    // Token addresses
    uint16 id;
    address aTokenAddress;
    address variableDebtTokenAddress;
    address interestRateStrategyAddress;

    // Accounting
    uint128 accruedToTreasury;       // Fees accumulated for treasury
    uint128 unbacked;                 // Unbacked aTokens (bridging)
    uint128 isolationModeTotalDebt;   // Debt in isolation mode
    uint128 virtualUnderlyingBalance; // Virtual accounting balance
}

Key Concepts

Interest Rate Model

Aave uses a variable interest rate model:

┌──────────────────────────────────────────────────────────────┐
│                    INTEREST RATE CURVE                       │
├──────────────────────────────────────────────────────────────┤
│                                                              │
│  Rate │                                    ╱                 │
│       │                                  ╱                   │
│       │                                ╱  Slope2             │
│       │                              ╱                       │
│       │                     ╱───────╱                        │
│       │                   ╱  Slope1                          │
│       │                 ╱                                    │
│       │      Base Rate ╱                                     │
│       └───────────────┼───────────────────────────────────   │
│                       │                                      │
│                   Optimal                                    │
│                 Utilization                                  │
│                                                              │
│  Utilization = Total Debt / (Virtual Balance + Total Debt)  │
│                                                              │
└──────────────────────────────────────────────────────────────┘

Loan-to-Value (LTV) and Liquidation

• LTV: Maximum borrowing power as percentage of collateral
• Liquidation Threshold (LT): When health factor drops below 1, liquidation is possible
• Liquidation Bonus (LB): Incentive for liquidators (extra collateral received)
• Health Factor: HF = Σ(Collateral × LT) / Total Debt

Virtual Accounting (V3.1+)

Aave V3.1+ tracks virtual balances to protect against donation attacks:

// Instead of checking actual token balance:
// balanceOf(aToken)

// Aave uses virtual balance tracking:
virtualUnderlyingBalance += amountSupplied;
virtualUnderlyingBalance -= amountWithdrawn;

eModes (Efficiency Modes)

Allow higher LTV for correlated assets:

struct EModeCategory {
    uint16 ltv;                  // Higher LTV for correlated assets
    uint16 liquidationThreshold;
    uint16 liquidationBonus;
    uint128 collateralBitmap;    // Which assets can be collateral
    uint128 borrowableBitmap;    // Which assets can be borrowed
    string label;
}

Protocol Flow

Supply Flow

User → Pool.supply() → SupplyLogic.executeSupply()
  1. Update reserve indexes
  2. Transfer underlying to aToken
  3. Mint aTokens to user
  4. Update virtual balance
  5. Update interest rates

Borrow Flow

User → Pool.borrow() → BorrowLogic.executeBorrow()
  1. Validate health factor will remain >= 1
  2. Update reserve indexes
  3. Mint debt tokens to user
  4. Transfer underlying to user
  5. Update interest rates

Liquidation Flow

Liquidator → Pool.liquidationCall() → LiquidationLogic.executeLiquidationCall()
  1. Verify user health factor < 1
  2. Calculate debt to cover and collateral to receive
  3. Burn debt tokens
  4. Transfer collateral to liquidator (+ bonus)
  5. Update interest rates

Version Features

Version	Key Features
V3.0	eModes, isolation mode, siloed borrowing
V3.1	Virtual accounting, stateful interest rates, liquidation grace period
V3.2	Liquid eModes, stable rate deprecation
V3.3	Deficit tracking, liquidation optimizations

Skills Reference

Skill	Description
aave-v3-pool	Core Pool operations (supply, borrow, repay, withdraw)
aave-v3-tokens	aTokens and Variable Debt Tokens
aave-v3-configuration	Reserve configuration and interest rate strategies
aave-v3-emodes	Efficiency Modes for correlated assets
aave-v3-flash-loans	Flash loan functionality
aave-v3-stata-token	ERC4626 wrapper for aTokens

Reference Files

• src/contracts/protocol/pool/Pool.sol - Main Pool contract
• src/contracts/protocol/pool/PoolConfigurator.sol - Configuration contract
• src/contracts/protocol/libraries/types/DataTypes.sol - Core data structures
• src/contracts/interfaces/IPool.sol - Pool interface
• src/contracts/interfaces/IPoolAddressesProvider.sol - Registry interface