Aave and Compound are the two dominant DeFi lending protocols. Together they hold over $20 billion in TVL and have defined how decentralized lending works. But which one should you use in 2025?
TL;DR — Quick Decision Guide
| If You Want... | Choose |
|---|---|
| Maximum chain options | **Aave** (10+ chains) |
| Simplest, safest design | **Compound** |
| Borrow multiple assets | **Aave** |
| Only borrow USDC/ETH | **Compound** |
| Best rates on Arbitrum/Base | **Both competitive** |
| Flash loans | **Aave** |
Quick Answer
For most users: Aave V3 is the better choice due to more features, more chains, and similar security.
For simplicity-focused users: Compound V3's streamlined design is easier to understand and has a smaller attack surface.
Protocol Overview
Aave V3
Launch: Aave V3 launched in March 2022, building on Aave V1 (2020) and V2 (2020).
Philosophy: Feature-rich, multi-market protocol offering maximum flexibility.
TVL: ~$15 billion (as of February 2025)
Governance: AAVE token holders vote on protocol parameters and upgrades.
Compound V3 (Comet)
Launch: Compound V3 launched in August 2022, a major redesign from V2.
Philosophy: Simplified, security-first design with one borrowable asset per market.
TVL: ~$3 billion (as of February 2025)
Governance: COMP token holders control protocol parameters.
Feature Comparison
Supported Chains
| Chain | Aave V3 | Compound V3 |
|---|---|---|
| Ethereum | ✅ | ✅ |
| Arbitrum | ✅ | ✅ |
| Optimism | ✅ | ✅ |
| Base | ✅ | ✅ |
| Polygon | ✅ | ✅ |
| Avalanche | ✅ | ❌ |
| BNB Chain | ✅ | ❌ |
| Gnosis | ✅ | ❌ |
| Scroll | ✅ | ❌ |
| Metis | ✅ | ❌ |
Winner: Aave — available on significantly more chains.
Borrowing Model
Aave V3: Multi-asset borrowing
Deposit any supported collateral
Borrow any supported asset
Complex but flexible
Compound V3: Single-asset markets
Each market has ONE borrowable asset
USDC market: deposit ETH/WBTC/etc., borrow only USDC
ETH market: deposit stETH/etc., borrow only ETH
Simpler, smaller attack surface
Winner: Depends on needs
Need to borrow DAI, USDT, or other assets? → Aave
Only need USDC or ETH? → Both work, Compound is simpler
Current Rates (February 2025)
| Asset | Chain | Aave Supply APY | Compound Supply APY |
|---|---|---|---|
| USDC | Ethereum | 4.5% | 4.8% |
| USDC | Arbitrum | 5.2% | 5.4% |
| USDC | Base | 5.8% | 5.5% |
| ETH | Ethereum | 2.1% | 2.3% |
Rates fluctuate based on utilization. Check current rates on each protocol.
Winner: Tie — rates are competitive, vary by chain and time.
Unique Features
#### Aave-Only Features
Efficiency Mode (eMode)
Borrow correlated assets at higher LTV
Example: Deposit stETH, borrow ETH at 93% LTV (vs. 80% normally)
Great for leveraged staking strategies
Isolation Mode
New assets added in isolated pools
Risk contained — can't use isolated assets as collateral for everything
Allows faster listing of new assets
Flash Loans
Borrow any amount without collateral
Must repay in same transaction
Powerful for arbitrage, liquidations, collateral swaps
0.05% fee (was 0.09% in V2)
Portal
Transfer supplied assets between Aave deployments on different chains
Seamless cross-chain experience
GHO Stablecoin
Native Aave stablecoin
Mint GHO by depositing collateral
Borrow at fixed rates
#### Compound-Only Features
Simpler Risk Model
One borrowable asset per market
Easier to reason about risk
Smaller codebase = smaller attack surface
No Governance Token Emissions
Compound V3 reduced token emissions significantly
Yields are "real" (from borrowers), not subsidized
Automatic Interest
Interest accrues directly to your supplied balance
No need to claim or compound manually
Security Comparison
| Metric | Aave V3 | Compound V3 |
|---|---|---|
| Audits | 10+ (Certora, Trail of Bits, etc.) | 5+ (OpenZeppelin, ChainSecurity) |
| Bug Bounty | $250K+ on Immunefi | $150K+ on Immunefi |
| Time in Production | 4+ years (V1-V3) | 5+ years (V1-V3) |
| Major Exploits | None (Aave itself) | None |
| Code Complexity | Higher (more features) | Lower (simpler design) |
Winner: Tie — both have excellent security records. Compound's simpler design is arguably safer by virtue of less code.
User Experience
Aave
Dashboard shows all positions across chains
More options = steeper learning curve
Mobile-friendly interface
Compound
Cleaner, simpler interface
Fewer choices to make
Quick to understand
Winner: Compound for beginners, Aave for power users.
When to Choose Aave
Use Aave If You:
Need to borrow assets other than USDC/ETH
Want to use eMode for correlated asset strategies
Use chains not supported by Compound (Avalanche, BNB, etc.)
Want to use flash loans
Are comfortable with more complexity for more flexibility
Best Aave Strategies
Leveraged Staking with eMode
Deposit stETH
Enable stETH-ETH eMode
Borrow ETH at 93% LTV
Swap ETH for more stETH
Repeat (carefully!)
Cross-Chain Yield Farming
Supply USDC on Base (higher rates)
Use Portal to move if rates change
Single position, multi-chain optimization
When to Choose Compound
Use Compound If You:
Only need to borrow USDC or ETH
Value simplicity and security above features
Are new to DeFi lending
Want to minimize smart contract risk
Don't need cross-chain features
Best Compound Strategies
Simple USDC Lending
Deposit USDC into Compound V3
Earn yield automatically
Withdraw anytime
Leveraged ETH with Safety
Deposit ETH
Borrow USDC
Convert to more ETH if bullish
Simple, single-asset market = clearer risk
Head-to-Head Scenarios
Scenario 1: "I have 10,000 USDC and want to earn yield"
Aave: Deposit on Base or Arbitrum, earn 5.2-5.8% APY.
Compound: Deposit on Arbitrum, earn 5.4% APY.
Verdict: Either works. Check current rates and pick the higher one.
Scenario 2: "I want to borrow against my ETH"
Aave: Deposit ETH, borrow USDC/DAI/USDT/GHO at your choice.
Compound: Deposit ETH in USDC market, borrow USDC only.
Verdict: Aave if you need flexibility. Compound if USDC is fine.
Scenario 3: "I want the safest option"
Aave: Battle-tested, but more code means more potential bugs.
Compound: Simpler design, explicitly built for security-first.
Verdict: Slight edge to Compound for pure security focus.
Scenario 4: "I want to maximize yield"
Both: Consider using Morpho, which optimizes rates on top of both protocols.
Verdict: Morpho vaults often beat both base protocols.
Frequently Asked Questions
Can I use both protocols?
Yes! Many users diversify across both. It's good practice not to put all funds in one protocol.
Which has lower fees?
Gas costs are similar. Both charge no protocol fee on lending (fees come from borrowers paying interest).
Are the tokens (AAVE/COMP) worth holding?
Both tokens have governance utility. AAVE has more tokenomics around staking and safety module. Neither is required to use the protocol.
What happens if one gets hacked?
This is why diversification matters. Both have insurance funds and are working on better protection mechanisms, but no protocol is 100% safe.
Can I switch between them easily?
Yes. Withdraw from one, deposit into the other. Some aggregators (like DefiSaver) can do this in one transaction.
The Morpho Factor
Worth noting: Morpho sits on top of both Aave and Compound, offering optimized rates through peer-to-peer matching. Many sophisticated users skip the decision entirely and use Morpho vaults, which automatically allocate to the best opportunities across both protocols.
Conclusion
Aave V3 is the more feature-rich option with wider chain support. Choose it if you need flexibility.
Compound V3 is the security-focused option with a simpler design. Choose it if you value simplicity.
For most users: Start with whichever has better rates on your preferred chain. Both are excellent, battle-tested protocols that have earned their reputations.
Next Steps
Compare current rates across both protocols