TL;DR
- Aave launched V4, a modular “hub-and-spoke” upgrade that eliminates liquidity fragmentation across the DeFi ecosystem.
- The model separates liquidity management from market logic, with Hubs concentrating deposits and Spokes accessing shared funds under their own rules.
- V4 will enable the creation of custom markets, integration of protocols like Pendle or Uniswap, and inheritance of Aave’s centralized security, governance, and liquidity.
Aave launched V4, an update that introduces a modular “hub-and-spoke” model designed to eliminate liquidity fragmentation in DeFi and transform the protocol into the ecosystem’s foundational infrastructure.
How V4 Works
This new system allows liquidity management to be separated from market logic: Hubs concentrate deposits and Spokes connect to them to access shared funds under customized rules.
Each Spoke can define its own risk policy, collateral types, and lending parameters, while drawing from the same liquidity used by other Aave markets. This allows new projects to launch specialized markets without needing to bootstrap deposits from zero, optimizing capital use and market depth across the system.
Its architecture allows products like Pendle, Uniswap, or Ethena to integrate directly into Aave without duplicating pools. A Pendle Spoke, for example, can use its principal tokens as collateral and borrow USDC from the same Hub used by the Core market, while a Uniswap LP Spoke can access ETH liquidity under its specific risk rules.
Aave Will Enable Custom Markets
In turn, this model allows the creation of fixed-term markets, institutional credit, or loans backed by AMM positions, all within a unified infrastructure. For developers, there is no need to build separate liquidation systems or acquire liquidity, as Spokes inherit the protocol’s security, governance, and risk management.
Aave aims to become a foundational layer for building custom financial applications. According to DefiLlama, the network manages over $45 billion in TVL across 19 chains. The launch of V4 is scheduled for the fourth quarter.
