Aave Brings V3 Lending Markets to Newcomer Monad

Aave's V3 lending protocol has launched on Monad, a relatively new Ethereum-compatible network, with 12 supported assets and its own GHO stablecoin. The launch includes USDT0, USDC, GHO, and other cryptocurrencies, marking Aave's first deployment with Chainlink Smart Value Recapture enabled from day one. This mechanism redirects part of the value generated during liquidations back to the protocol rather than external seekers.

The Monad Foundation has committed $15 million in incentives over the first 12 months, as well as a pledge to acquire and hold 10 million GHO for more than six months. LlamaRisk, a risk assessor, supported the deployment but noted that Monad's activity has cooled since launch and that liquidity remains concentrated in established protocols.

Aave aims to solve the 'cold-start problem' faced by new lending markets, where depositors and borrowers tend to gravitate towards venues with deep liquidity. The incentives are designed to draw liquidity to the new markets and encourage early adoption.