The new Aave staking module, Umbrella, has a positive and uplifting effect on the Aave Protocol.

The Aave Protocol is transitioning from using $AAVE as a last-resort excess debt backstop to utilizing aTokens supplied by users through Umbrella staking to generate additional yield.

Additionally, the Aave DAO can configure each staking pool with a predefined coverage amount, which serves as the first line of defense before staker funds are used as a backstop.

This system strikes an optimal balance by enabling both users and the Aave DAO to mitigate protocol risk without the need to slash any $AAVE.

While other protocols focus on risk-taking and increasing tail risk, Aave is solidifying its position as the most secure and well-backstopped lending protocol, thanks to a community that prioritizes user safety.

This is just the beginning. Aave V4 will introduce even more innovative risk management features for the benefit of users and integrators.

Just use Aave.