Aave credit delegation in one example

The image is the official cover art from BloFin Academy's Aave lending series.

Who does what

• Delegator (you): supplies collateral, sets the E-Mode category, and approves a borrow amount for each debt asset. Carries the debt and the liquidation risk.
• Delegatee: calls borrow up to the approved amount, using your address as onBehalfOf, and receives the tokens to spend like any other balance.

How the approval works

1. Pick the asset they will borrow and find its variable debt token, for example variableDebtUSDC.
2. Call approveDelegation on that token with their address and a maximum amount. You can also sign it off-chain with delegationWithSig.
3. Repeat for every debt token you want to open. One approval covers one token only.
4. Remember that each call overwrites the previous figure. Approving 5,000 after 10,000 leaves 5,000, not 15,000. Approving 0 removes it.

The worked example

You supply $10,000 of ETH with a 0.80 liquidation threshold and approve 10,000 USDC. The delegatee borrows 6,000.

• Health Factor = (10,000 x 0.80) / 6,000 = 1.33
• Allowance left: 4,000 USDC
• If they try to borrow that last 4,000, HF would be 8,000 / 10,000 = 0.80, so the borrow fails even though the allowance covers it

Now ETH drops until your collateral is worth $7,000. HF falls to about 0.93. The 50% cap on how much debt a liquidator can repay only applies while HF is above 0.95 (with collateral and debt each at least $2,000), so at 0.93 a liquidator can repay all of it and take your ETH plus a bonus. The delegatee still has the 6,000 USDC.

Three things that catch people

• E-Mode must match. If your account is in the stablecoin category, a WETH borrow by the delegatee reverts.
• Repaying does not refill the allowance. Borrow 6,000, repay all of it, and 4,000 is still what is left until you approve a new number.
• Anyone can repay on your behalf (repay or repayWithPermit), and you can repay with aTokens of the same asset through repayWithATokens.

Closing the line takes two steps

First get the debt to zero. Then call approveDelegation with an amount of 0 on every debt token you approved, and read borrowAllowance afterward to confirm it shows 0. The guide also notes Aave V4 went live on Ethereum on March 30, 2026, so check which version your market runs before you approve anything.

If AAVE price moves are part of your risk picture, BloFin lists both AAVE/USDT spot and the AAVEUSDT perpetual, which sit apart from any Aave position.

Any allowance you forget about is still an open credit line on your collateral.