Introduction
The Aave Safety Module has been upgraded to Umbrella, a more efficient system for protocol protection. Users can now stake their Aave aTokens (like aUSDC, aUSDT, aWETH) or GHO to contribute to protocol security while earning rewards. By staking, participants add an additional layer of protection, with the acknowledgement that their assets may be slashed in the event of a shortfall to cover any protocol deficits.
Tokens can be supplied through protocol smart contracts or through a frontend such as Aave Labs interface, by performing the following steps:
Available Staking Options
Umbrella (New System)
- Aave aTokens (e.g., aUSDC, aUSDT, aWETH)
- GHO
Legacy Safety Module
Step 1: Connect Wallet
To begin, press 'Connect Wallet' and select the Ethereum wallet provider corresponding to the wallet holding tokens intended to supply to safety module.
Step 2: Select Safety Module Pool
Once connected, navigate to the 'Stake' tab where you'll find a list of available safety module pools, including both Umbrella and legacy options.
Step 3: Approve Token Transfer
In order to transfer tokens on an Ethereum-based network, the staked token smart contract must be granted an allowance to transfer tokens from the connected wallet address. After selecting a pool to supply, a modal will appear which will prompt a transaction in the connected wallet.
Step 4: Perform Stake Transaction
After approval, enter the amount you wish to stake and confirm which will prompt a transaction in the connect wallet. Your tokens are then added to the selected safety module, where they will start earning safety incentives, which can be monitored from the 'Stake' tab.
Understanding Slashing Risks
When staking in either Umbrella or the legacy Safety Module, it's important to be aware of the potential slashing risks. Slashing refers to the reduction of staked assets in the event of a shortfall event within the Aave Protocol. This mechanism is in place to protect the protocol by using a portion of staked assets to cover any deficits that may arise.
Umbrella Slashing
Umbrella uses automated slashing based on actual deficit levels, with each staked asset covering only its corresponding borrowed asset on the same network.
Legacy Safety Module Slashing
Slashing events in the legacy Safety Module occur through an onchain governance vote. Assets can be used to cover deficit up to the maximum slashing percentage. The Umbrella activation proposal has modified slashing percentages to the following which are subject to change by future governance decisions:
- stkAAVE and stkABPT: Maximum slashing risk is up to 20% of the staked assets
- stkGHO: Maximum slashing risk is up to 0% of the staked assets (slashing disabled)