Introduction

High Efficiency Mode, or E-mode, is a feature in the Aave Protocol V3 that allows users to maximize their borrowing power when their collateral and borrowed assets are closely correlated in price. For example, stablecoins are often grouped in the same E-mode category, allowing users to borrow more efficiently within that group. E-mode increases the Loan-to-Value (LTV) and Liquidation Threshold (LT) ratio for correlated assets, enabling users to borrow up to a larger percentage of their collateral value. However, when using E-mode, borrowing is restricted to assets within the selected category, while you can still supply assets outside of E-mode with standard collateral parameters.

Enabling and disabling E-mode can be performed through protocol smart contract or using a frontend such as the Aave Labs interface.

Step 1: Connect Wallet

To start, press ‘Connect Wallet’ and select your Ethereum wallet provider. Verify that the wallet holds the collateral assets you wish to manage.

Step 2: Navigate to E-mode Options

Once connected, navigate to the ‘Dashboard’ where you will find the E-mode button next to account summary row, if available for your selected market.

Step 3: Enable or Disable E-mode

Click the ‘E-mode’ button to open a modal. This modal will allow you to select the E-mode category that matches your collateral and borrow strategy, such as stablecoin, ETH-correlated, or None (to disable E-Mode). After selecting the appropriate category, confirm the transaction in your wallet to enable E-mode. This action will increase your borrowing power for assets within the chosen category, and restrict token available for borrowing to the selected asset category.

Step 4: Supply / Borrow

The steps to supply and borrow in E-mode follow the same procedure as when E-mode is disabled. The only differences are the collateral parameters and assets available to borrow which are both dictaded by the active E-mode category.