Aave
AAVE#36AAVE is the governance token of Aave, a decentralised protocol where people lend and borrow crypto at interest.
- Market cap
- $2.79B
- Volume 24h
- $719.87M
- All-time high
- —
- Circulating supply
- 15.44M
Fails our Shariah screening. Needs caution: nature of the asset and benefit and harm (maslahah). Fails: interest (riba), business model, and usage.
- 3 pass
- 2 caution
- 3 fail
Verdict history
- Not halalCurrent
First publication
Fundamentals, market picture and news will appear here.
Halal analysis
Can a Muslim hold Aave?8 Shariah criteria
3 pass · 2 caution · 3 failHolders benefit from interest income: protocol revenue from borrowers' interest funds AAVE buybacks, and stakers receive a share of GHO interest revenue.
Riba means interest or any guaranteed increase on a loan. Holding AAVE pays no coupon, but the value that reaches holders comes from interest. Aave's docs say supplier yields are funded by borrower interest net of the reserve factor, the share kept by the protocol, and that the DAO's buyback programme uses protocol revenue to buy AAVE on the market (started April 2025, $50 million a year budget). Aavenomics 3.0, which Aave confirmed active on 27 June 2026, is designed to route Aave Protocol and GHO revenue to AAVE holders by default through automated buybacks.
Staking AAVE in the Safety Module (stkAAVE) earns AAVE rewards from the Ecosystem Reserve and, under the March 2025 Aavenomics ARFC, Anti-GHO funded by half of GHO revenue; the same proposal set out to end the slashing risk that once justified the reward, and Aave's docs say stkAAVE slashing is disabled once its replacement, Umbrella, reaches sufficient scale. Staking also lowers the staker's GHO borrowing rate. This is not a reward for validation work. Simply holding AAVE pays nothing directly, but the benefit that reaches holders and stakers is funded by interest, so the criterion fails at the top of the fail range. Islamic Finance Guru, the first-priority authoritative source, rates Aave impermissible for exactly this reason: crypto is lent and more of it is returned, which is riba; SRB, CryptoUmmah and ShariaQuant reach the same conclusion.
AAVE has a working function as a governance and backstop token, but that function serves interest-based lending, and official bodies disagree on whether crypto is property (mal).
Mal is property that Islamic law recognises as having value and that can be owned and traded. AAVE is used: holders vote on a protocol with about $19 billion of deposits, stake it as a backstop, and use it as collateral. Its value, however, rests on governing and capturing revenue from interest-based lending rather than on a permissible service in its own right.
Official bodies also disagree about crypto in general: Malaysia's Securities Commission Shariah Advisory Council (2020) treats digital currency without an underlying asset as tradable goods on registered exchanges, while Egypt's Dar al-Ifta (2017), Turkey's Diyanet (2017), the UAE General Authority of Islamic Affairs (2018) and Indonesia's MUI (2021) prohibit dealing in it. None of them names Aave.
AAVE has no chance-based payout and a real governance and backstop function, though its trading is dominated by perpetual futures.
Maysir is gambling: winning or losing by chance rather than through productive exchange. Ordinary price swings are not maysir, and AAVE has no lottery-like payout; its main use is governing and backstopping the protocol. The market around it is heavily speculative, though: on Binance on 27 September 2026, 24-hour AAVEUSDT perpetual futures volume was about $126 million against about $17 million on the spot pair, so futures were about 88% of the combined volume (a single-day snapshot on one exchange).
That concrete speculative pattern lowers the score within pass; derivatives themselves are assessed under trading mechanisms.
The protocol earns mainly from interest: it keeps a share of what borrowers pay, far above the 5% limit for impermissible income.
This criterion asks how the issuer or protocol earns. Aave's core service is lending at interest: borrowers pay variable interest, suppliers receive it net of the reserve factor, and the reserve factor share goes to the Aave DAO treasury. DefiLlama counts Aave's fees as borrow interest, flash-loan fees, liquidation fees and similar charges; it showed about $742 million of fees and about $96 million of treasury revenue over the year to 27 September 2026. GHO, Aave's own stablecoin, is also lent to borrowers at interest.
The exact split of revenue by source was not obtained, but interest is the protocol's main business, so income from a clearly impermissible source is well above the 5% threshold.
Supply is fixed at 16 million and fully created, and code and governance are public, though governance roles and treasury use have shifted often.
Gharar is excessive uncertainty or hidden information in a deal. AAVE's supply is fixed at 16 million tokens, all created at the 2020 migration, so there is no inflation or pending unlock schedule; the token contract and holder data are public on Etherscan, and protocol changes go through a public forum and on-chain votes. The score is lowered within pass for concrete governance churn: buybacks were paused in April 2026 and later automated, service providers BGD Labs and ACI left, and Aave Labs asked for $25 million plus 75,000 AAVE under the Aave Will Win framework.
The concentration of voting power was not measured and is listed as a data gap, not counted against the score.
AAVE's main purpose is to govern, backstop and capture revenue from an interest-based lending market.
This criterion looks at what the asset is actually used for. AAVE is used to vote on Aave's interest rates, listings and treasury, to stake in the Safety Module as a backstop for lenders, and as collateral for borrowing on Aave. Each of these serves interest-based lending, an impermissible main purpose. Some assets on Aave are permissible in themselves, but the token exists to run the lending market, so the status is fail.
Fully paid spot AAVE is widely available and can be held in one's own wallet.
This criterion asks whether the asset can be owned in a permissible way. AAVE trades spot, with full payment and delivery, on major exchanges such as Binance, and it is an ordinary ERC-20 token that can be withdrawn to a self-custody wallet. Grayscale has filed to list an ETF that would hold AAVE itself, without staking or lending it, but it was not confirmed as listed on 27 September 2026. Ownership therefore does not depend on derivatives or leveraged wrappers.
Aave is open, transparent financial infrastructure, but it spreads interest-based credit and its markets carried losses from the April 2026 rsETH exploit.
Maslahah weighs public benefit against harm. Aave gives anyone open access to transparent, automated markets that run without a bank. The harm is the spread of interest-based credit and leverage, and the risk it passes on to users: after the 18 April 2026 Kelp DAO bridge exploit, unbacked rsETH entered Aave markets, the Aave Guardian froze rsETH reserves on several chains, the DAO paused buybacks to keep capital for the response, and Aave's deposits fell by about $8 billion. The flaw was not in Aave's own contracts. Interest itself is counted under riba and business model, not again here.
How you can use it
Tap a card for the ruling and sourcesBuying AAVE with full payment and immediate delivery is widely available, but spot is acceptable only for a HALAL or DOUBTFUL asset. AAVE is rated HARAM because its value comes from interest-based lending, and a fully paid purchase does not change that.
Grayscale's proposed Aave ETF would hold AAVE itself and says it will not stake, lend or pledge it, which is the cleanest fund structure. It was not confirmed as listed on 27 September 2026, and it would still carry the HARAM rating of the underlying token.
AAVE is not used as a means of payment, and tier-1 bodies such as Indonesia's MUI rule that using cryptocurrency as currency is not permissible.
Staking AAVE in the Safety Module (stkAAVE) is not validation work. Rewards come from the Ecosystem Reserve and, under the March 2025 Aavenomics proposal, from Anti-GHO funded by GHO interest revenue, while stkAAVE slashing is being phased out in favour of Umbrella, and staking lowers the staker's GHO borrowing rate. Umbrella staking uses interest-bearing aTokens and GHO.
Margin trading in AAVE is never acceptable: it is a deferred exchange with borrowed money and leverage (AAOIFI SS 20).
AAVE perpetual futures are the largest part of its trading volume, but futures, perpetuals and options always fail under AAOIFI SS 20: deferred exchange without delivery, usually with leverage.
Supplying AAVE to Aave or other lending markets, or to exchange lending programmes, pays interest from borrowers. This is riba.
AAVE yield products are built on lending interest, Safety Module rewards or revenue from interest-based lending, so they fail.
Scholars quotes
Penggunaan cryptocurrency sebagai mata uang hukumnya haram, karena mengandung gharar (ketidakjelasan), dharar (bahaya) dan bertentangan dengan Undang-Undang nomor 7 tahun 2011 tentang Mata Uang dan Peraturan Bank Indonesia nomor 17 tahun 2015 tentang Kewajiban Penggunaan Rupiah di Wilayah Negara Kesatuan Republik Indonesia.Bitcoin is a digital currency that does not meet the legal and Sharia criteria that make it a currency subject to the rulings of dealing with official legal currencies recognized internationally.بناءً على ذلك: فلا يجوز شرعًا تداول عملة "البتكوين" والتعامل من خلالها بالبيعِ والشراءِ والإجارةِ وغيرها، بل يُمنع من الاشتراكِ فيها؛ لعدمِ اعتبارِها كوسيطٍ مقبولٍ للتبادلِ من الجهاتِ المخُتصَّةِ، ولِمَا تشتمل عليه من الضررِ الناشئ عن الغررِ والجهالةِ والغشِّ في مَصْرِفها ومِعْيارها وقِيمتها، فضلًا عما تؤدي إليه ممارستُها من مخاطرَ عاليةٍ على الأفراد والدول.That is straightforwardly riba and not permissible.Aave is fundamentally an interest-based lending and borrowing protocol, which directly conflicts with Islamic principles regarding Riba.According to research and opinion of experts so far, cryptocurrency is not considered ‘ maal ’ (wealth) in Sharia.The AAVE protocol and token are not Shariah compliant. AAVE is used to facilitate interest-based lending and therefore breaches the core Shariah principles.Sebagaimana mata wang yang lain, mata wang digital hendaklah tidak digunakan sebagai bayaran kepada barangan, perkhidmatan dan aktiviti tidak patuh Syariah seperti pembelian dadah, pelacuran, perjudian dan pendanaan aktiviti keganasan serta penggubahan wang haram.The SAC has also resolved that investment and trading of Digital Assets that fulfil the above requirements and which are traded on Digital Asset Exchange (DAX) registered with SC are permissible.Third: In light of the above and given the significant risks associated with this type of currencies and the instability of their transactions, the Council of the Academy recommends pursuing research and studies on issues affecting its ruling.Muhammadiyah memandang transaksi dan investasi kripto pada dasarnya mubah (boleh) tetapi dengan syarat tertentu.The opinion on this is the same as doing the same with any halal assets such as shares – 1) is permissible, 2) is more debatable and there are differing opinions on short-term trading.Our current position is 'tawaquf'; we can't say it is halal or haram, but we say it is better not to engage in itAs I mentioned at the beginning of this article it is not necessary to substantiate the permissibility of something as long as there are no prohibited factors involved in it or surrounding it.AI-assisted analysis checked against sources. Not a fatwa or investment advice.
Where it trades
Section in preparation
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