Isolation Mode

Listing a new kind of collateral normally means risking the whole pool: if it collapses and leaves bad debt behind, every supplier pays for it. Isolation mode is Aave V3's answer, and it is the right default for collateral that is young, concentrated and can reprice sharply after an exchange closure.

What it means for your position

• One equity collateral at a time. Enable NVDA as collateral and SPCX will not also count towards borrowing power, even if you have supplied it. It still remains in your supplied balance; it just does not back the loan.
• You must enable it explicitly. Supplying an isolated asset does not switch collateral on. The app offers that as a separate transaction, and until you take it the deposit grants no borrowing power.
• USDG is the only thing you can borrow. It is the sole isolation-borrowable asset, which keeps the debt easy to price and easy to liquidate against.
• Each reserve has a debt ceiling. A hard cap in USD on total debt borrowed against that collateral across every user combined. It is global, so a reserve can sit at its ceiling while your own position has plenty of headroom.

Why it suits this market

• Valuation adapters work independently. An unavailable stock price affects accounts that need that valuation. Shared borrowing checks may still close new debt for other stocks until the affected reserve's borrowing power is confirmed disabled onchain. Isolation mode alone does not guarantee independent borrowing status.
• Exposure is bounded per ticker. Debt ceilings and supply caps together keep the market's exposure to any one company inside what a liquidator could plausibly unwind at stressed size.
• Concentration is explicit. An isolated position is an honest representation of what you actually hold: a loan against one company, or one private-company mark.

Working with the constraint

If you want to borrow against two listed assets, the practical route is two separate positions in two wallets, each isolated on its own collateral. Switching a single position from one collateral to another means repaying the debt, disabling the first asset, then enabling the second. If debt remains, the disable step needs a valid price and must leave the account healthy.

Live debt ceilings, remaining headroom and the enable-collateral action are all on the market page in the app. Related reading: How the Market Works.