## Repaying Your Borrowed Assets on Aave V3 This guide will walk you through the process of repaying a borrowed asset on the Aave V3 protocol using its web interface. We'll start by looking at a typical dashboard scenario and then proceed step-by-step through the repayment process, observing the changes to your financial position within the Aave V3 ecosystem. Our starting point is the Aave V3 dashboard ("Core Instance") reflecting an active borrow position: * **Net worth:** $1.92 * **Net APY:** 2.55% * **Health factor:** 1.22 (A crucial metric indicating loan safety; liquidation can occur if this drops below 1.0) * **Your supplies:** * DAI: A balance of $5.15, earning a 2.57% APY, and actively used as collateral ($5.15). * **Your borrows:** * ETH: A debt of 0.0017815 ETH (valued at $3.23) with a borrow APY of 2.58%. * The "Borrow power used" is significantly high at 99.55%. * E-Mode is noted as "DISABLED". Our goal is to repay the borrowed ETH. ### Step-by-Step: Repaying Your ETH Loan Follow these steps to clear your ETH debt: 1. **Navigate to Your Borrows and Initiate Repayment:** * On your Aave V3 dashboard, locate the "Your borrows" section. * Find the entry for ETH (or the asset you wish to repay). * Click the "Repay" button associated with your ETH borrow. This action will open a modal window for the repayment process. 2. **Configure Repayment Details in the Modal:** * A "Repay ETH" modal window will appear. * **Repay with:** Ensure "Wallet balance" is selected. This means you'll use ETH from your connected external wallet to make the repayment. (The alternative, "Collateral," is not used in this demonstration). * **Amount:** To repay the entire outstanding amount, click the "MAX" button. This will auto-fill the amount field with your total ETH debt (in this example, 0.00178146173373... ETH, equivalent to $3.23). * The modal will also display your current "Wallet balance" for ETH (e.g., 0.0126699 ETH). * **Transaction overview:** Review the details provided: * **Remaining debt:** This will update to show your debt decreasing from its current value (e.g., 0.0017815 ETH / $3.23) to $0 after the transaction. * **Health factor:** Your current health factor (e.g., 1.22) will be displayed. * **Estimated gas fee:** An initial platform estimate for the transaction cost will be shown (e.g., $0.18). * Once you've reviewed and confirmed the details, click the "Repay ETH" button at the bottom of the modal. 3. **Confirm the Transaction in Your Wallet:** * After clicking "Repay ETH," your connected cryptocurrency wallet (e.g., MetaMask) will prompt you with a confirmation pop-up. * This pop-up will detail the transaction: * **Interacting with:** `app.aave.com` (the Aave V3 application) * **Method:** Repay ETH * **Amount:** The ETH amount being repaid (e.g., 0.001781 ETH) * **Network fee:** The estimated gas fee for the transaction on the Ethereum network (e.g., ~0.00008 ETH). * **Estimated speed:** The approximate time for the transaction to confirm (e.g., ~12 seconds). * Click "Confirm" in your wallet pop-up to authorize the transaction. ### Observing the Dashboard After Repayment Once the transaction is confirmed on the blockchain, your Aave V3 dashboard will update to reflect the changes: * **Your borrows:** This section will now display "Nothing borrowed yet." The ETH borrow entry will be removed, as the debt has been fully repaid. * **Net worth:** Your net worth will increase. In our example, it rises from $1.92 to $5.15 (the original net worth plus the $3.23 debt that was cleared). * **Net APY:** The Net APY will change, reflecting only your supply APY since there's no longer a borrow APY to factor in. For instance, it might change from 2.55% to 2.57%. * **Health factor:** Since there are no active borrows, the health factor will no longer be displayed. It is only relevant when you have outstanding debt. * **Your supplies (DAI):** Your supplied DAI balance and its APY will remain unchanged. * **Assets to supply (ETH Wallet Balance):** Under "Assets to supply," your ETH wallet balance will decrease by the repaid amount and the gas fee. For example, if your initial ETH wallet balance was 0.0126699 ETH, and you repaid 0.0017815 ETH with a gas fee of approximately 0.00008 ETH, your new ETH balance might be around 0.0107315 ETH. (Note: The displayed balance might sometimes be slightly different from manual calculations due to rounding or minor variations in gas). ### Key Concepts Related to Aave V3 Repayments Understanding these concepts is crucial when managing your positions on Aave V3: * **Repaying Debt:** This is the core action of reducing or eliminating your borrowed liabilities on the platform. It directly improves your financial standing within Aave. * **Wallet Balance:** The external cryptocurrency wallet connected to Aave V3 (e.g., MetaMask) holds the funds (like ETH) used for repayments if you select "Wallet balance" as the source. * **Health Factor:** A numerical representation of your loan's safety. It's calculated based on your collateral value versus your borrowed value. A higher health factor is safer. Repaying debt improves your health factor. If all debt is repaid, the health factor is no longer applicable. A value below 1.0 can lead to liquidation of your collateral. * **Net Worth:** On Aave, this is calculated as your Total Supplied Assets minus your Total Borrowed Assets. Repaying debt decreases your "Borrowed Assets," thereby increasing your Net Worth. * **Net APY:** This is your overall Annual Percentage Yield, considering both the interest earned on your supplied assets and the interest paid on your borrowed assets. Repaying a loan removes the borrow APY from this calculation, thus altering your Net APY. * **Gas Fees:** All transactions on blockchains like Ethereum require network fees, known as gas fees, paid in the native currency (ETH). These fees compensate miners/validators for processing your transaction. * **Aave V3 Protocol:** The decentralized finance (DeFi) protocol that enables lending and borrowing of various crypto assets without intermediaries. * **Borrow Power Used:** This percentage indicates how much of your available credit line (based on your collateral) you are currently utilizing. Repaying debt reduces this percentage, freeing up more borrowing capacity. If all debt is repaid, this will be 0%. ### Conclusion You have now successfully repaid your borrowed ETH on the Aave V3 platform. This process involved navigating to your borrowed assets, specifying the repayment amount (using the "MAX" option for a full repayment from your wallet balance), and confirming the transaction through your connected wallet. As demonstrated, repaying your debt positively impacts your net worth and removes the associated borrow APY and health factor considerations, simplifying your financial position on Aave. This completes the demonstration of the repayment feature within the Aave V3 protocol.