DeFi platform Aave has deployed its lending protocol V3 on the Monad network, expanding the blockchain ecosystem with a new lending market supporting 12 assets at launch.
On Thursday, Aave announced that the first version of the market includes USDT0, USDC, stablecoin GHO, USDe, mUSD, AUSD, WETH, cbBTC, wstETH, weETH, syrupUSDC and sUSDe.
The launch on Monad is also the first deployment of Aave with Chainlink Smart Value Recapture technology enabled from day one. This allows a portion of the revenue generated from liquidations to be directed back into the protocol.
The integration expands Aave‘s multichain ecosystem and simultaneously gives users and developers on Monad access to one of the largest borrowing markets in DeFi, the GHO stablecoin, and liquidity incentive programs designed to accelerate network growth.
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The Monad team has already pledged $15 million in incentives during the first year of operation to attract liquidity and new users.
According to Aave governance proposal, the Monad network is fully compatible with the Ethereum environment. This allows existing smart contracts to be deployed on Solidity and familiar Ethereum tools to be used with almost no changes.
Total value locked (TVL) in the Monad network as of Thursday. Source: DefiLlama.
The Aave Launch Will Test Whether Monad Can Attract Liquidity
According to Aave governance documents, the Monad Foundation will allocate $15 million for various incentives during the first year after the protocol launch. In addition, the foundation has committed to purchase and hold 10 million GHO for at least six months. For its part, Aave DAO will allocate another 500,000 GHO to user incentive programs.
These measures are intended to help the network quickly gain liquidity at launch. However, the main question is whether user activity can be sustained after the incentive programs begin to wind down.
According to analysts at LlamaRisk, the main Monad network was launched on November 24, 2025. As of June 8, the total value locked (TVL) in the network was about $359.5 million.
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Analysts also noted that after a strong start, activity growth rates began to slow, and most liquidity remains concentrated in a few large protocols.
Despite this, LlamaRisk supported the launch of Aave on the Monad network, though they recommended using conservative parameters due to the relatively short operational history of the blockchain.
The launch also comes amid growing interest from institutional players in using tokenized assets in DeFi lending. In June, Standard Chartered bank stated that the inflow of such assets into decentralized finance could increase deposits in Aave. At its peak in October 2025, the protocol’s deposit base reached about $75 billion.
Back in April, the Centrifuge platform announced plans to transfer tokenized US Treasury bonds, private credit instruments, and AAA-rated collateralized debt obligations to the Monad network. These assets are intended to be used for lending, collateral, and secondary market trading.
Although Centrifuge has not yet announced direct integration of its assets with Aave, the presence of one of the largest lending protocols on the network creates ready-made infrastructure for Monad that could support the tokenized asset market in the future.
