CM|Mar 26, 2026 12:55
The Aave V4 Reinvestment Module doesn't seem outstanding. From what I can see, it's simply reinvesting idle funds in the lending market that haven't been borrowed by borrowers.
There are quite a few questions. If too much is taken away, the lender needs to withdraw, and the buffer funds in the pool are not enough, what should be done? This involves redemption issues. If it affects the borrower, it is not appropriate. Taking too much is obviously not good, but if it is too little, the increase in returns will be limited.
And doing so is equivalent to introducing another risk related party. According to official estimates, the average idle USDT in 2025 is about 1.2 billion US dollars. Investing all of this would increase the return on the lender from 4% to 4.9%, but it is obviously impossible to invest all of it. If we were to split it in half, it could increase the return by around 0.5%.
Of course, Aave's explanation is that in most cases, this can ensure that the return of the lender is not lower than the risk-free interest rate of short end products such as SOFR. Mainly to cope with the sluggish market situation.
Overall, it can only be considered as a icing on the cake.
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