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Aave V2 Review 2026: Legacy Lending Market Explained

Aave V2 is one version of the non-custodial Aave lending protocol, live on Ethereum, Polygon and Avalanche with about $103 million in TVL. It is an established design, but newer Aave versions now get the homepage focus.

By the DappsAtlas editorial team · Updated Nov 4, 2026

DappsAtlas score

7.3/10

Good

Visit Aave V2

Our verdict on Aave V2

7.3/10

Aave V2 suits experienced DeFi users who want a well-known, non-custodial lending market and are comfortable reading contract and liquidation risk. Its main strength is the Aave track record: open-source code, audits and onchain governance, with about $103 million in TVL across three chains. The main caveat is that Aave's homepage highlights V3 and v4-based products instead, so newcomers should confirm V2's current status and compare newer versions before depositing.

Score breakdown

How Aave V2 scores

Security: 8.0/10
Ease of use: 6.5/10
Fees: n/a
Features: 6.5/10

Scores run from 0 to 10 and are based only on facts we could verify. Where information was missing we mark the score n/a rather than guess.

What is Aave V2?

Aave V2 is one version of Aave, a decentralised, non-custodial protocol where users earn interest on deposits and borrow assets. DefiLlama lists it under Lending on Ethereum, Polygon and Avalanche, with about $103 million in total value locked and two audits.

Aave itself was founded in 2017 according to its homepage, which also claims six years of uninterrupted operation and independent audits. Those claims describe the Aave brand as a whole, not V2 alone. The homepage presents Aave V3 and Aave Pro, built on v4, as current products, and does not list V2.

That makes V2 best read as an established, older market inside a larger ecosystem. The mechanism is well understood, but readers should confirm the current status of V2 markets in the official documentation before committing funds.

How Aave V2 works

Aave is a pooled lending protocol. Suppliers deposit tokens into a shared smart-contract pool and earn interest. Borrowers take tokens out of that pool by locking collateral worth more than the loan.

Because loans are overcollateralised, the protocol does not need to know who the borrower is. If the collateral value falls too far, the position can be liquidated to repay the debt and protect suppliers.

Risk settings are controlled by governance-approved parameters. Changes are made through onchain proposals voted on by AAVE holders, and the AAVE token can also be staked in the Safety Module as a backstop in a shortfall event.

6 features

Key features

Supply to earn interest

Users supply tokens to shared liquidity pools and earn interest from borrowers. Funds sit in publicly accessible smart contracts rather than with a company.

Overcollateralised borrowing

Borrowers post collateral that exceeds the value of their loan. This overcollateralisation is the main protection for suppliers.

Non-custodial and open source

Aave describes the protocol as open source and non-custodial, so users keep control of their wallets and the code can be inspected by anyone.

Three-chain deployment

V2 is listed on Ethereum, Polygon and Avalanche, giving users a choice of networks and gas costs.

Onchain governance

Protocol parameters change only through onchain Aave Improvement Proposals voted on by AAVE holders.

Safety Module backstop

AAVE can be staked in the Safety Module to act as a backstop in a shortfall event, earning incentives for taking that risk.

Pros and cons

What we like

Non-custodial design: funds sit in public smart contracts rather than with a company.
Open-source code that Aave says has been audited and formally verified by third parties; DefiLlama lists two audits.
Runs on Ethereum, Polygon and Avalanche, so users can choose among networks.
About $103 million in TVL shows continued capital in this version.
Governance through onchain proposals, plus an ongoing bug bounty according to Aave.

Watch out for

The Aave homepage lists Aave V3 and Aave Pro (built on v4) as current products and does not list V2, so newer versions appear to be where the project's attention is.
Smart-contract risk remains despite audits, and the Aave site itself says no protocol is entirely risk free.
Overcollateralised borrowing can be liquidated if collateral value falls, which can cost borrowers part of their position.
Fee and rate figures for V2 specifically are not given publicly, so users must read live rates in the app.
The Aave site states Aave Labs does not control or operate any version of the protocol, so there is no central party to appeal to if something goes wrong.

Aave V2 fees

Fees for Aave V2 are not published. In this type of protocol, suppliers earn a variable rate and borrowers pay a variable rate, both set by pool usage and shown live in the app.

Users should also expect network gas fees on Ethereum, Polygon or Avalanche for every deposit, borrow, repay and withdrawal. Liquidation penalties can apply if a borrowing position falls below its required collateral level.

Is Aave V2 safe?

Aave states that its smart contracts have been audited and formally verified by third parties and that an ongoing bug bounty exists. DefiLlama lists two audits for V2. The homepage also mentions an annual SOC 2 Type 2 security audit, but this is stated for Aave generally and the project does not tie it to V2.

Risks remain: contract bugs, oracle failures, governance decisions and liquidation of borrowers. Aave's site says Aave Labs does not control or operate any version of the protocol, and the project does not mention a specific licence. No incidents are listed publicly, but users should check current governance forums and security pages. This review is based on published information, not hands-on testing, and is not financial advice.

6 steps

How to get started with Aave V2

1
Check the official Aave documentation to confirm what is currently available on V2 and whether a newer version suits you better.
2
Set up a self-custody wallet and fund it with the asset you want to supply plus the chain's native token for gas.
3
Connect the wallet to the official Aave interface only, and verify the address before approving anything.
4
Review the live supply and borrow rates and the collateral settings for the asset you plan to use.
5
Supply tokens to earn interest, or supply collateral first if you plan to borrow.
6
If borrowing, keep a safe margin above the liquidation threshold and monitor your position regularly.

Open Aave V2

Who Aave V2 is for

Aave V2 is for users who already understand wallets, gas fees and collateral ratios and want to supply or borrow on Ethereum, Polygon or Avalanche. Beginners and anyone unwilling to manage liquidation risk should start with the current Aave products and the official documentation.

Aave V2 FAQs

What is Aave V2?

Aave V2 is a version of the Aave protocol, a non-custodial system where users supply tokens to earn interest or borrow against collateral. It runs on Ethereum, Polygon and Avalanche according to DefiLlama.

How much is locked in Aave V2?

Public sources list about $103.1 million in TVL for Aave V2, down about 1.0% over seven days. The wider Aave brand reports far larger net deposits across all its versions, so the two figures should not be confused.

Is Aave V2 safe?

No lending protocol is risk free. Aave says its contracts are audited and formally verified by third parties and that a bug bounty runs, and DefiLlama lists two audits for this version. Risks such as contract bugs, oracle problems and liquidation still apply.

What does the AAVE token do?

The AAVE token is used to vote on Aave Improvement Proposals. It can also be staked in the Safety Module as a backstop in case of a shortfall, in return for incentives.

Do I need collateral to borrow?

Yes. Borrowers must post collateral worth more than the amount borrowed. If the collateral value drops too far relative to the loan, the position can be liquidated.

Should I use V2 or a newer Aave version?

The homepage lists Aave V3 and Aave Pro, built on Aave v4, as products, and V2 is not among them. Check the official documentation and the live app to see what is currently available for V2 before depositing.

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