Aave's Token Falls 30% in Four Weeks as Risk Advisers Propose Collateral Wind-Down

Aave's governance token lost roughly 30% of its value in four weeks, a steeper decline than either bitcoin or ether over the same window, according to aggregated CoinGecko price data reviewed through Nov. 13. The token's quote stood at $108.88 at 9:30 p.m. ET on Nov. 13, the lowest among the provider's samples for the preceding 28 days.

The measured losses were 16.7% over approximately seven days and 29.7% over approximately 28 days. Over the matching four-week period, bitcoin fell 17.5% and ether dropped 21.7%; their seven-day declines were 11.5% and 15.7%, respectively. The comparison establishes underperformance against the two benchmarks. It does not establish a cause for Aave's additional losses.

A caveat applies to the record itself. The low refers to aggregated price samples, not an exchange-level intraday mark. Readers should treat the figure as a benchmark observation rather than a trading record.

What happened to capital locked in the protocol?

Total value locked in Aave fell from $17.95 billion to $15.53 billion between Oct. 17 and Nov. 14, according to DefiLlama's daily UTC observations — a decline of about 13.5%. That contraction is smaller than the token's drop over the roughly corresponding period.

The distinction matters. TVL measures the value of assets locked in the protocol, not net deposits and not borrowing demand. As DefiLlama's own methodology explains, falling asset prices can reduce TVL even when users deposit more assets. The decline therefore cannot be read as an equivalent withdrawal of capital.

Put plainly: the protocol shrank less than its token did, and the shrinkage may reflect market prices rather than departing users.

What did the risk adviser propose?

Governance discussions have turned toward reducing collateral risk. Aave risk adviser LlamaRisk proposed winding down $1.33 billion of collateral in Aave V3 Core, positions backing $1.03 billion of debt as of Nov. 9. The firm argued that pooled borrowing rates leave suppliers exposed to complex collateral without adequate compensation for the additional risks taken.

The plan, as The Defiant previously reported, would proceed in stages:

• Affected reserves would be frozen initially, stopping new supply and new borrowing against them.
• Existing loans would not face immediate liquidation.
• Borrowers could repay, withdraw, or migrate their positions.

LlamaRisk said it would submit the initial measures as an on-chain governance proposal following approval. That framing carries a condition worth noting: nothing takes effect until the proposal passes governance, and no date has been set.

The scale is material. The $1.33 billion of collateral at issue represents roughly 8.6% of the protocol's $15.53 billion in total value locked as of Nov. 14 — a meaningful share of Aave V3 Core's risk surface, should the wind-down proceed.

What comes next?

Two threads now run in parallel: a token underperforming its benchmarks by a wide margin, and a governance process that could freeze more than a billion dollars in reserves. LlamaRisk's next step is a formal on-chain proposal after approval, and its reception among Aave token holders will determine whether the collateral wind-down advances.