Mastering Aave: Repaying Debt and Withdrawing Supply

Navigating Aave involves understanding how to manage your supplied assets and repay your debts efficiently. If you are new to supplying assets on Aave and need guidance, you can start with this article on how to do so.

This guide breaks down the essential steps for repaying debts and withdrawing supplies, ensuring you maitain a healthy portfolio and avoid liquidation risks.

What you will find in this article:

Crucial note: before withdrawing your supply on Aave, it’s necessary to repay any oustanding debts. This means returning the assets you borrowed using your sypply as collateral. Failure to do so limits you to withdrawing only the “free amount” - the difference between your supply and borrow. This action could push your Health Factor close to or at 1, potentially leading to liquidation.

REPAYING YOUR DEBT

Aave provides two main options for debt repayment:

Option A: Repay with wallet balance

1)In the Dashboard, click “Repay” in the “Your Borrows” section.

2)Choose “Wallet Balance”. Aave displays your current wallet balance of the debt asset.

3)Decide how much debt you want to repay.

4)In the “Transaction overview” review the changes in your remaining debt and Health Factor. Fully repaying your debt renders the Health Factor “♾️”, eliminating liquidation risk.

If the asset needed to repay your debt isn't available in your wallet, but you have other assets you'd like to use instead, consider swapping them on Velodrome if you're operating on the Optimism blockchain. Learn how to execute swaps efficiently in our guide to swapping on Velodrome.

Option B: Repay with collateral

This allows you to use to use your supplied assets (collateral) for debt repayment, useful if your collateral has appreciated in value.

1)After selecting “Repay”, choose “Collateral” for the repayment source.

2)Specify how much debt to cleat. Aave calculates the necessary collateral amount.

3)Pay attention to the updated Health Factor, Borrow balance and collateral balance post-repayment.

WITHDRAWING YOUR SUPPLY

Aave provides two main options for supply withdrawal:

Option A: Direct Withdrawal

1)From “Your Supplies” in the Dashboard, click “Withdraw”.

2)Enter how much you wish to withdraw, with Aave showing your available balance.

3)Review the remaining supply balance and proceed with the withdrawal.

Option B: Withdraw and Switch

1)After clicking “Withdraw” from “Your Supplies”, choose “Withdraw & Switch” in the withdrawal menu.

2)Input the amount you want to withdraw and switch. Aave shows the available balance.

3)Select which asset you wish to receive. The protocol calculates the estimated received amount.

By following this steps, you ensure your engagement with Aave remains productive, safeguarding against market volatility and enhancing your DeFi investment strategy.

KEY TAKEAWAYS

• Repaying debt: essential for unlocking your supply for withdrawal. It can be done using assets in your wallet or directly with your collateral.

• Withdrawing supply: after debt repayment, you can withdraw or switch your supply to another asset, offering flexibility in managing your portfolio.

This guide aims to simplify the repayment and withdrawal process on Aave, helping you to make informed decisions ad maintain a ribust financial health.

Lynn Brooke

This article serves educational purposes and is not financial advice. We encourage you to do your own research and be responsible for your actions in the financial space.