Aave Says V3.8 Security Proposal Preserves Flash-Loan Liquidations

Aave Labs has clarified that its proposed V3.8 security upgrade would preserve flash-loan liquidations. The October 23 response addresses how a reentrancy guard would interact with existing integrations. TL;DR: Aave’s proposed V3.8 guard excludes flash-loan entry points. Governance approval and security audits remain pending. The proposal, posted October 21, adds a guard to Pool operations. Such guards constrain the ability of an external callback to enter protected contract functions again before an earlier call finishes. Aave Labs says flashLoan() and flashLoanSimple() would be excluded, allowing their callbacks to keep invoking Pool actions, including liquidations. Why The Callback Matters A smart contract receiving a flash loan needs time within the transaction to do something with the borrowed assets. Aave’s developer guide describes a sequence in which the Pool transfers assets, calls the receiver contract and then checks settlement conditions. For a simple flash loan, the receiver must make the amount borrowed plus the required fee available for repayment. If the transaction cannot meet its conditions, it reverts. The broader flash-loan interface can cover multiple assets an...