{
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  "id": "aave-efficiency-mode",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/aave-efficiency-mode/",
  "collection": "defi",
  "title": "Aave efficiency mode: correlated assets and a narrower risk assumption",
  "description": "Understand Aave’s category-specific collateral settings and why higher borrowing capacity still depends on asset relationships.",
  "aliases": [
    "Aave eMode explained",
    "Aave category borrowing permissions"
  ],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T19:18:00.092Z",
    "dataAsOf": "2026-10-02"
  },
  "authorship": {
    "publisher": "Degrees of Satoshi editorial project",
    "process": "AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied."
  },
  "quickAnswer": {
    "text": "Aave Efficiency Mode, or E-mode, applies a selected category’s borrowing permissions and collateral parameters. It can permit more borrowing for certain asset combinations, but it also restricts eligible borrowing. Higher capacity is not protection against a breakdown in the assets’ expected relationship or against liquidation.",
    "claimId": "aave-efficiency-mode-quick-answer",
    "sourceIds": [
      "x425-defi-aave-emode",
      "x425-defi-aave-health"
    ]
  },
  "keyFacts": [
    {
      "label": "Category rules",
      "value": "Each category specifies its own LTV, liquidation threshold and bonus.",
      "sourceIds": [
        "x425-defi-aave-emode"
      ],
      "id": "category-rules",
      "claimId": "aave-efficiency-mode-fact-category-rules"
    },
    {
      "label": "Borrowing scope",
      "value": "Borrowing is restricted to the selected category’s permitted assets.",
      "sourceIds": [
        "x425-defi-aave-emode"
      ],
      "id": "borrowing-scope",
      "claimId": "aave-efficiency-mode-fact-borrowing-scope"
    },
    {
      "label": "Multiple categories",
      "value": "The retrieved liquid E-mode description permits assets in more than one category.",
      "sourceIds": [
        "x425-defi-aave-emode"
      ],
      "id": "multiple-categories",
      "claimId": "aave-efficiency-mode-fact-multiple-categories"
    }
  ],
  "prerequisites": [
    "loan-to-value-vs-liquidation-threshold"
  ],
  "sections": [
    {
      "id": "example",
      "heading": "More capacity can mean a smaller buffer",
      "sourceIds": [
        "x425-defi-aave-emode",
        "x425-defi-aave-health"
      ],
      "paragraphs": [
        "Consider hypothetical eligible collateral worth 1,000 and a category liquidation threshold of 95%. Borrowing 900 gives health factor 950 / 900 ≈ 1.056. If collateral value drops to 940 while debt remains 900, the result is 893 / 900 ≈ 0.992.",
        "The assumed 6% relative decline crosses the threshold despite the assets initially being treated as related. These are teaching parameters, not a current market configuration."
      ]
    },
    {
      "id": "eligibility",
      "heading": "Read permissions for the specific category",
      "sourceIds": [
        "x425-defi-aave-emode"
      ],
      "paragraphs": [
        "Do not infer eligibility from a familiar ticker or from another network’s settings. Review the category’s collateral list, borrowable list and parameters. Existing borrowing can constrain whether a category change is valid."
      ]
    },
    {
      "id": "monitor",
      "heading": "Watch the relationship and the total debt",
      "sourceIds": [
        "x425-defi-aave-health",
        "x425-defi-aave-emode"
      ],
      "paragraphs": [
        "The useful risk question is how the collateral’s value can move relative to what is owed. Interest also increases debt. Check the proposed post-change health factor and the exact selected category rather than treating E-mode as a universal safety setting."
      ]
    }
  ],
  "faq": [
    {
      "question": "Does E-mode make every supplied asset better collateral?",
      "answer": "No. Benefits and permissions are category-specific; assets outside the relevant rules do not automatically receive them.",
      "sourceIds": [
        "x425-defi-aave-emode"
      ]
    }
  ],
  "claims": [
    {
      "id": "aave-efficiency-mode-quick-answer",
      "articleSlug": "aave-efficiency-mode",
      "statement": "Aave Efficiency Mode, or E-mode, applies a selected category’s borrowing permissions and collateral parameters. It can permit more borrowing for certain asset combinations, but it also restricts eligible borrowing. Higher capacity is not protection against a breakdown in the assets’ expected relationship or against liquidation.",
      "sourceIds": [
        "source-8037b70863bfb264",
        "source-74f79d59daaab5f0"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-8037b70863bfb264",
          "locator": "Categories; correlated assets; risks"
        },
        {
          "sourceId": "source-74f79d59daaab5f0",
          "locator": "Health Factor; Managing Health Factor"
        }
      ],
      "scope": {
        "collection": "defi",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:18:00.092Z",
        "reviewer": "Independent automated verification — Codex root, separate from the DeFi drafting agent",
        "notes": [
          "Checked current liquid E-mode categories/multiple membership and borrowing permissions.950/900≈1.056;940×.95/900≈.992; no current parameter values asserted."
        ]
      }
    },
    {
      "id": "aave-efficiency-mode-fact-category-rules",
      "articleSlug": "aave-efficiency-mode",
      "statement": "Category rules: Each category specifies its own LTV, liquidation threshold and bonus.",
      "sourceIds": [
        "source-8037b70863bfb264"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-8037b70863bfb264",
          "locator": "Categories; correlated assets; risks"
        }
      ],
      "scope": {
        "collection": "defi",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
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      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
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        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:18:00.092Z",
        "reviewer": "Independent automated verification — Codex root, separate from the DeFi drafting agent",
        "notes": [
          "Checked current liquid E-mode categories/multiple membership and borrowing permissions.950/900≈1.056;940×.95/900≈.992; no current parameter values asserted."
        ]
      }
    },
    {
      "id": "aave-efficiency-mode-fact-borrowing-scope",
      "articleSlug": "aave-efficiency-mode",
      "statement": "Borrowing scope: Borrowing is restricted to the selected category’s permitted assets.",
      "sourceIds": [
        "source-8037b70863bfb264"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-8037b70863bfb264",
          "locator": "Categories; correlated assets; risks"
        }
      ],
      "scope": {
        "collection": "defi",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
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      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:18:00.092Z",
        "reviewer": "Independent automated verification — Codex root, separate from the DeFi drafting agent",
        "notes": [
          "Checked current liquid E-mode categories/multiple membership and borrowing permissions.950/900≈1.056;940×.95/900≈.992; no current parameter values asserted."
        ]
      }
    },
    {
      "id": "aave-efficiency-mode-fact-multiple-categories",
      "articleSlug": "aave-efficiency-mode",
      "statement": "Multiple categories: The retrieved liquid E-mode description permits assets in more than one category.",
      "sourceIds": [
        "source-8037b70863bfb264"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-8037b70863bfb264",
          "locator": "Categories; correlated assets; risks"
        }
      ],
      "scope": {
        "collection": "defi",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:18:00.092Z",
        "reviewer": "Independent automated verification — Codex root, separate from the DeFi drafting agent",
        "notes": [
          "Checked current liquid E-mode categories/multiple membership and borrowing permissions.950/900≈1.056;940×.95/900≈.992; no current parameter values asserted."
        ]
      }
    }
  ],
  "sources": [
    {
      "id": "x425-defi-aave-emode",
      "label": "Efficiency Mode",
      "publisher": "Aave",
      "url": "https://aave.com/help/borrowing/e-mode",
      "locator": "Categories; correlated assets; risks",
      "note": "Higher capital efficiency under category assumptions.",
      "version": "Documentation retrieved for the 2026-10-02 editorial scope; content hash recorded",
      "checkedAt": "2026-10-02T18:53:21.760Z",
      "contentSha256": "05936f508560f64ecb0257f8239b79d2e450d5344973cd908f48840f74d0af0b",
      "recordId": "source-8037b70863bfb264"
    },
    {
      "id": "x425-defi-aave-health",
      "label": "Health Factor and Liquidations",
      "publisher": "Aave",
      "url": "https://aave.com/help/borrowing/liquidations",
      "locator": "Health Factor; Managing Health Factor",
      "note": "Weighted liquidation thresholds; no universal safe ratio.",
      "version": "Documentation retrieved for the 2026-10-02 editorial scope; content hash recorded",
      "checkedAt": "2026-10-02T18:53:21.960Z",
      "contentSha256": "30c991765c763cc1bc7665de9fdf6603c969677068261beca7dfb11eb85018f4",
      "recordId": "source-74f79d59daaab5f0"
    }
  ],
  "related": {
    "articles": [
      "collateral-looping",
      "toggle-lending-collateral",
      "loan-to-value-vs-liquidation-threshold",
      "defi-debt-refinancing"
    ],
    "dossiers": [],
    "wallets": []
  },
  "revisionHistory": [
    {
      "date": "2026-10-02",
      "kind": "published",
      "summary": "First publication after primary-source research and separate automated verification."
    }
  ],
  "citation": "Degrees of Satoshi editorial project. “Aave efficiency mode: correlated assets and a narrower risk assumption.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/aave-efficiency-mode/"
}