Paper 2026/675

SoK: DeFi Lending and Yield Aggregation Protocol Taxonomy, Empirical Measurements, and Security Challenges

Tom Azoulay, Technion - Israel Institute of Technology

Yoad Abels, Technion - Israel Institute of Technology

Aviv Yaish, Yale University, IC3, Complexity Science Hub

Ori Rottenstreich, Technion - Israel Institute of Technology

Abstract

Decentralized Finance (DeFi) lending protocols implement programmable credit markets without intermediaries. This paper systematizes the DeFi lending ecosystem, spanning collateralized lending (including over- and under- collateralized designs, and zero-liquidation loans), uncollateralized primitives (e.g., flashloans), and yield aggregation protocols which allocate capital across underlying lending platforms. Beyond a taxonomy of mechanisms and comparing protocols, we provide empirical on-chain measurements of lending activity and user behavior, using Compound V2 and AAVE V2 as case studies, and connect empirical observations to protocol design choices (e.g., interest-rate models and liquidation incentives). We then characterize vulnerabilities that arise due to notable designs, focusing on interest-rate setting mechanisms and time-measurement approaches. Finally, we outline open questions at the intersection of mechanism design, empirical measurement and security for future research.

Note: The paper was recently accepted to IEEE Transactions on Network and Service Management.

@misc{cryptoeprint:2026/675,
      author = {Arad Kotzer and Tom Azoulay and Yoad Abels and Aviv Yaish and Ori Rottenstreich},
      title = {{SoK}: {DeFi} Lending and Yield Aggregation Protocol Taxonomy, Empirical Measurements, and Security Challenges},
      howpublished = {Cryptology {ePrint} Archive, Paper 2026/675},
      year = {2026},
      url = {https://eprint.iacr.org/2026/675}
}