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Aave Oracle

Each reserve within the Aave Protocol is associated with an oracle contract. These oracle contracts are responsible for reporting the market price of assets in the protocol, which is essential for determining collateralization requirements.

The oracle for each reserve is selected through Aave Governance, establishing a decentralized model where the community decides which data sources are used. Price feeds update according to their own logic, such as heartbeat or deviation thresholds.

Types of Oracles in Use

Currently, there are two primary types of oracle contracts used on production Aave markets:

  • Chainlink Price Feeds: Chainlink oracles provide highly reliable, decentralized price data for various assets. These price feeds pull data from multiple sources and aggregate them, minimizing the risk of manipulation or outages.
  • Correlated Assets Price Oracle (CAPO): CAPO adapters price assets that track another asset. For liquid staking tokens such as wstETH, the price is the underlying price times an exchange rate whose growth is capped at a maximum yearly rate. For stablecoins such as USDC, the price is capped at a fixed maximum. The caps limit the impact of price manipulation. See more details about its implementation on GitHub.

For the contract that serves these prices to the protocol, see the AaveOracle reference.