Aave V1 Review 2026: Legacy Lending on Ethereum

Aave V1 is the first-generation lending market of the Aave protocol, deployed on Ethereum. Users can supply assets to earn interest or borrow against collateral, with all positions held in public smart contracts rather than by a company. The wider Aave project was founded in 2017 and describes itself as the world's largest onchain lending network.

V1 is now a small part of that picture. It is listed with about $7.4M in total value locked, while the homepage cites $30.8B in net deposits across the network and promotes the Aave App, Aave Pro built on v4, and Aave V3. The Aave token, AAVE, is used for governance and can be staked in the Safety Module.

Aave Labs states that it does not control or operate any version of the protocol, which runs as open-source self-executing contracts. Two audits are listed for V1, and the project cites a bug bounty and onchain governance for changes.

Aave is a pool-based lending protocol. Suppliers deposit tokens into shared smart contracts and earn interest. Borrowers draw from the same pool after posting collateral worth more than the amount borrowed, which is why the protocol calls this overcollateralised lending.

Interest rates adjust with how much of the pool is borrowed. Search descriptions of the protocol say borrowers can choose variable or stable rates, and that flash loans are available. If a borrower's collateral falls too far in value, the position can be liquidated to protect suppliers.

Parameters such as which assets are accepted are set by governance. AAVE holders vote on proposals, and AAVE can also be staked in the Safety Module to act as a backstop in a shortfall event. V1 is the earliest generation of this design on Ethereum.

Aave V1's fee and rate details are not published on the project homepage. Interest rates on supplied and borrowed assets are set by the protocol according to market utilisation, so the live figures appear in the lending interface rather than a fixed schedule.

Because V1 runs on Ethereum, users also pay network gas on each deposit, borrow, repayment or withdrawal. On a position worth only a few hundred dollars, gas can be a meaningful share of the return.

Aave states its smart contracts have been audited and formally verified by third parties, that the code is publicly auditable, and that changes go through onchain governance with a bug bounty running. Two audits are listed for V1. The homepage also notes a SOC 2 Type 2 annual security audit, though it does not say what scope this covers.

Risks remain. Smart-contract bugs, oracle problems, collateral price drops leading to liquidation, and shortfall events are all possible, and the project itself says no protocol is entirely risk free. V1 is a legacy deployment, so users should weigh whether a current version better suits them. No licence or regulatory status for V1 is published; Aave Labs says it does not operate the protocol.

Aave V1 is for existing depositors and borrowers on the original market, and for researchers interested in how early pool-based lending worked. New users who simply want to earn interest or borrow will likely look at the newer Aave versions the official site promotes.