Aave v3: taxation of the new advanced functionalities in Spain

Aave v3 is the most recent version of the decentralized lending protocol and brings important changes to how users can manage their collateral and debt. These new capabilities create tax scenarios that advanced users must understand.

Review: How Basic Aave Works

In Aave, you deposit collateral and can borrow up to a percentage of that collateral (LTV: Loan-to-Value). Interest is paid by the borrower and received by the lender.

New feature 1: Efficiency Mode (eMode)

eMode (Efficiency Mode) allows users who deposit and borrow correlated assets (e.g. stETH and ETH, USDC and DAI) to obtain a much higher LTV (up to 97%).

Example of use:

• You deposit $10,000 of stETH as collateral (in normal mode: maximum LTV 80%).
• With eMode (stETH/ETH): LTV rises to 93%.
• You can borrow up to $9,300 in ETH.
• The stETH "loop": stETH → collateral → ask for ETH → buy stETH → more collateral → repeat.

eMode Taxation:

• The eMode does not change the taxable events, it only allows you to use more LTV.
• Each operation within the loop is a fiscal event just like in v2.
• Greater exposure to the stETH loop implies more tax events (see article 147 on loops).

New feature 2: Isolation Mode

Isolation mode restricts certain assets (the most "exotic" ones) to be used as collateral only up to a specific debt limit and only to borrow certain "safe" assets (USDC, USDT, DAI).

Example: XTOKEN is listed on Aave v3 in isolation mode with a debt ceiling of $1M in USDC.

• You can deposit XTOKEN as collateral.
• You can only order USDC/USDT/DAI, not ETH or other assets.

Isolation mode taxation:

• No conceptual differences: deposit XTOKEN → if it generates a position token (aXTOKEN) → possible transmission.
• The interest received for depositing a token in isolation mode → same treatment as movable capital.

New feature 3: Portals (cross-chain)

Aave v3 Portals allows moving positions between chains (e.g., from Ethereum to Polygon) without going through an external bridge.

Portal Taxation:

• Moving collateral from Ethereum to Polygon via Portal: is it streaming?
  • Your ETH/collateral is still yours, just change chains → possibly not streaming.
  • Conservative stance: could be a transfer of Ethereum aToken + acquisition of Polygon aToken.
• Without specific DGT criteria, the least conservative position (no transmission) seems reasonable as it is the same economic position.

New feature 4: Risk parameters for supply cap and borrow cap

Aave v3 introduces maximum supply and lending limits per asset. If an asset reaches its supply cap:

• You cannot deposit more.
• Those who deposited early could sell their aTokens on the secondary market at a discount if there is a lot of demand.
• Sell aTokens on the market → transmission of aTokens (GPO).

GHO: Aave's native stablecoin

Aave v3 launched GHO, a decentralized stablecoin similar to DAI but created directly by the Aave protocol:

• You mint GHO by depositing collateral in Aave.
• The GHO has a fixed interest rate (decided by Aave's DAO).

GHO taxation:

• Identical to DAI: the minted GHO is debt, not income.
• The interest on the GHO (stability rate) is a cost → possibly deductible as a financial investment expense.
• If you sell the GHO → transmission of GHO at the market price.

AAVE token: staking and Safety Module

AAVE token also has its own staking in the Safety Module (SM):

• You stake AAVE in the SM → you receive stkAAVE.
• The SM acts as insurance: if there is a deficit in the protocol, stkAAVE can be "slashed".
• SM rewards → movable capital.
• Risk of slashing → property loss if it occurs.

stkAAVE taxation:

• AAVE → stkAAVE: possible AAVE transmission.
• stkAAVE rewards → movable capital.
• Upon unlocking → possible transmission of stkAAVE → return to AAVE.
• If there is slashing → asset loss (reduction of stkAAVE).

Aave v3 summary table

Updated: April 2026 | Fiscal year: 2025