How to Spot Aave Risks with Signals
Identify and monitor risk factors in your AAVE holdings with health signals.
Aave Risk Overview
Aave is a decentralized money market protocol where users can lend and borrow cryptocurrency across 20 different assets as collateral. The protocol has a native token called AAVE, which is also a governance token that lets the community decide the direction of the protocol in a collective manner. Lenders can earn interest by providing liquidity to the market, while borrowers can borrow by collateralizing their cryptoassets to take out loans from the liquidity pools.
Understanding Aave Risk Signals
Fundamentally provides 7 types of risk signals to help you monitor your Aave (AAVE) position. These signals combine your Focus score, market timing (CBBI), and position sizing to alert you when conditions warrant attention.
Risk Signals for Aave
- Concentration Risk: Your AAVE position exceeds your bet size range
- Liquidity Risk: Your position is large relative to daily trading volume
- Volatility Risk: Large price swings combined with meaningful position size
- Focus-Timing Mismatch: High Focus but unfavorable market timing
- FOMO Risk: Good timing but low Focus score
- Cleanup Candidate: Very small position with low Focus
- Overweight Poor Timing: Above bet size range during unfavorable conditions
Volatility Context
Aave currently exhibits stable price action with a 24-hour volatility of 0%. As a stablecoin, AAVE is designed to maintain price stability, but this doesn't eliminate all risks such as de-pegging events or protocol vulnerabilities.
How Fundamentally Monitors Aave Risks
View Your Signals
7 Risk SignalsOpen the Signals page to see which risk signals are active for Aave. Each signal tells you specifically what risk is present in your AAVE position.
Understand Each Signal
Clear ExplanationsConcentration Risk triggers when AAVE exceeds your bet size range. Volatility Risk signals you to large price swings. Focus-Timing Mismatch warns when market conditions don't favor your position.
Take Informed Action
You DecideUse the Investment Calculator to determine how much Aave to rebalance if needed. Signals are informational—you decide what action to take based on your strategy.
Concentration Risk
Signals when your AAVE position exceeds the bet size range based on your Focus score.
Liquidity Risk
Monitors when your Aave position is large relative to daily trading volume.
Volatility Risk
Tracks AAVE price swings and signals when volatility affects your position.
Timing Signals
Combines your Focus for Aave with CBBI market timing to identify mismatches.
Frequently Asked Questions
Fundamentally monitors 7 risk signals for Aave: Concentration Risk, Liquidity Risk, Volatility Risk, Focus-Timing Mismatch, FOMO Risk, Cleanup Candidate, and Overweight Poor Timing. These combine your AAVE Focus score, position size, and market conditions.
Stablecoins like Aave can lose their peg during market stress or reserve issues. Monitor AAVE reserve composition, redemption mechanisms, and historical peg stability when evaluating concentration risk.
Stablecoins like Aave face de-peg risk rather than typical volatility. Monitor AAVE reserve health, audit reports, and any deviation from the $1 peg. Concentration Risk still applies if you hold too much in a single stablecoin.
Monitor Aave Risk Signals
Stay informed about risks in your portfolio with Fundamentally's signal system.