- Aave reopened all V3 and V4 markets on Friday after freezing them in response to Binance’s roughly $6.3 billion hack, but kept nine tokens, including USDT and USDC, at zero collateral value so they cannot back new loans.
- The attacker had deposited $60 million in stolen USDT on Aave and borrowed 19,762 WETH before the freeze, though Aave’s contracts were never compromised.
- The caution matters to DeFi borrowers, suppliers, and market makers as the industry absorbs the largest crypto theft on record.
On October 30, 2026, Aave has resumed its lending market operations on V3 and V4 subsequent to the Binance hacking incident, which incurred losses to the tune of $6.3 billion, resulting in the precautionary closure of operations. The lending markets resumed full operation, except for nine assets that are still restricted.
In the update released on October 30, Aave confirmed that, as of now, all markets had most definitely resumed full operations. The contracts were not affected, and all positions remained fully secured.
Nine tokens that can supply but not back loans
The nine assets with restrictions are: USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUT, PAXG and OP. Also covered under restrictions are the wrapped and bridged forms of these assets. In its statement of October 30, LlamaRisk reported that all these assets have zero loan-to-value ratio in Aave V3 and zero collateral factor in V4.
This does not mean that the users cannot transact with the assets. Users can deposit, withdraw, borrow and repay funds as they have been doing before. The restrictions only prevent these assets from being used as collateral for new loans.
Current V3 positions will not be impacted. Their liquidation thresholds and health scores will remain the same. On V4, existing collateral parameters will continue to be valid until a borrower either borrows more funds, takes out the collateral, or alters the collateral status of an asset.
How stolen USDT became a $44.6 million WETH loan
Prior to the freeze, the hackers had previously made use of Aave. Between 20:58 and 21:01 UTC on October 29, a wallet associated with the hackers deposited an amount of 60 million USDT into the Aave V3 Ethereum Core platform and borrowed around 19,762 WETH, which at that time was equivalent to something around $44.6 million.
Aave made an announcement at 21:42 UTC to freeze the markets. New deposits and borrowing activities halted, while withdrawals, repayments, and liquidations remained in place.
The report submitted by LlamaRisk on October 30 indicated that the assets within that position had been worth a total of $59.9 million, while debt amounted to $43.8 million. So, the position remained overcollateralized. LlamaRisk added that there was no risk for any of Aave’s suppliers.
Why reopening squeezed liquidity
The freeze prevented new borrowing, but it also put pressure on existing borrowers. Suppliers could withdraw their funds, while new deposits remained blocked. As liquidity fell, utilization in major stablecoin pools climbed to 92–100%, according to LlamaRisk’s October 30 analysis.
Normally, higher borrowing rates help attract fresh deposits. But frozen reserves couldn’t accept them. Instead, rising interest costs added to borrowers’ debt. To ease the pressure, LlamaRisk reduced Slope2 interest-rate settings.
The reopening brought forth a new risk. The result could mean billions in unused borrowing capacity becoming available at once. Secondly, a new risk adjustment tightened borrowing limits. Based on LlamaRisk’s update on October 30, the changes eliminated $3.7 billion of unused capacity on V3 and $130 million on V4.
With those safeguards in place, Aave’s guardians reopened markets in four waves. Most assets regained their ability to serve as collateral.
What it means for crypto credit
The incident highlights an important distinction. Binance was breached, not Aave. Yet the attacker was able to use Aave’s lending markets, forcing the protocol to take precautions.
The scale of the theft made the situation particularly serious. Elliptic’s October 30 analysis put the losses at $6.43 billion. That’s more than four times the $1.46 billion stolen from Bybit in 2025.
Meanwhile, Binance promised to cover losses using its SAFU reserve and corporate funds. In its October 30 statement, the exchange said approximately $3 billion had been frozen on-chain. However, freezing stolen assets doesn’t necessarily mean those funds have been recovered.
The disruption also spread to trading desks. Reuters reported on October 30 that GSR saw Bitcoin spreads widen to five times their normal level. Ether spreads reached 2.5 times normal. Aave’s reopening returns the lending business to normal across most assets. However, it demonstrates how liquidity and borrowing can get affected after a security breach happens at one platform.
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FAQs
Which nine assets remain at zero LTV on Aave?
USDT, USDC, USDT0, POL, WAVAX, sAVAX, XAUT, PAXG and OP, plus their bridged and wrapped versions, stay at an LTV of 0 on Aave V3 and a collateral factor of 0 on Aave V4, according to LlamaRisk and Aave.
Was Aave itself hacked?
No. Aave said its contracts were unaffected and positions stayed fully collateralized; the freeze was a precaution after the Binance breach, and the attacker's only Aave position was overcollateralized and open to normal liquidation.
How large was the Binance hack?
Estimates range from Binance's own figure of about $6.3 billion to Elliptic's $6.43 billion, making it the largest crypto theft on record, more than four times the $1.46 billion stolen from Bybit in 2025.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
Micah Abiodun
Micah Abiodun makes good use of his Environmental Engineering and Management (MSc) at Tallinn University of Technology (TalTech) to polish content and price prediction news at Cryptopolitan. Now on his 7th year in the crypto media space, he covers major cryptos, altcoins, DeFi, stablecoins, macro trends, and emerging tech.
