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Aave has introduced Umbrella, a fully on-chain staking-based risk management system designed to replace its legacy Safety Module. This new framework automates coverage for bad debt and enhances capital efficiency across the Aave Protocol. The rollout began on Ethereum and will expand to other networks.
- Umbrella replaces Aave's legacy Safety Module with an automated, capital-efficient system for bad debt coverage.
- Staked aTokens (e.g., aUSDC, aWETH) can be burned automatically to address deficits, reducing governance delays.
- The system includes three upgradeable smart contracts: StakeTokens, Rewards Controller, and Umbrella Core.
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