Introduction

High Efficiency Mode (E-mode) in Aave Protocol V3 allows users to maximize their borrowing power by selecting optimized asset categories. With the recent addition of liquid E-modes, assets may belong to multiple E-mode categories, providing greater flexibility in choosing the most efficient borrowing strategy based on category-specific parameters and asset availability.

Each E-mode category specifies its own Loan-to-Value (LTV), Liquidation Threshold (LT), Liquidation Bonus, and borrowing permissions for each asset in the category. When an E-mode is activated, borrowing is restricted to assets within the chosen category. Therefore, it’s essential to review the available assets, collateral, and borrowing parameters within the category before enabling E-mode.

Enabling or disabling E-mode can be done directly on the Aave Protocol smart contracts or via interfaces like the Aave Labs interface.

Step 1: Connect Wallet

Press ‘Connect Wallet’ to select your preferred wallet provider and confirm it holds the collateral assets you plan to use.

Step 2: Navigate to E-mode Options

After connecting, go to the ‘Dashboard’ and locate the E-mode option near your account summary row. The availability of E-mode options depends on the assets in your wallet and their category eligibility.

Step 3: Select E-mode Category

Click the ‘E-mode’ button to open the selection modal. You can then enable, switch, or disable an E-mode category that aligns with your collateral strategy. Take note of the collateral and borrowing availability and parameters to determine which E-mode aligns with the intended borrowing strategy. Confirm the transaction in your wallet to apply or disable the selected E-mode, which will affect the asset availability and parameters for borrowing.

Step 4: Supply / Borrow

Once E-mode is active, the steps for supplying and borrowing follow standard protocol procedures. However, remember that your collateral parameters and borrowing options are now tailored to the active E-mode category, dictating available assets and adjusted risk parameters.