Aave V4 Goes Live on Ethereum - Protocol Targets Real-World Credit Markets

The largest DeFi lending protocol Aave has officially launched its fourth version on the Ethereum mainnet. The upgrade, which took over two years to develop, introduces a modular hub-and-spoke architecture and paves the way for real-world asset-backed lending directly on the blockchain. The launch was announced at the EthCC conference in Cannes.

Hub-and-spoke architecture: what changed

The essential advancement of the fourth version is a modular architecture where central Liquidity Hubs provide capital to individual markets called Spokes. Each spoke can operate with its own collateral rules, risk parameters, and liquidation mechanisms while utilizing the shared liquidity pool of the central hub.

At launch, Aave V4 operates with three hubs: Core, Prime, and Plus. Additionally, e-Mode spokes have been deployed for correlated assets, allowing users to borrow and lend closely related pairs at reduced interest rates. This flexibility enables building credit products of varying risk levels on shared infrastructure.

Supported assets and partners

At launch, V4 supports a broad range of assets: USDT, USDC, EURC, XAUt (tokenized gold), cbBTC (Coinbase's wrapped Bitcoin), frxUSD, and USDG. Among the partners whose dedicated spokes are available from day one are liquid staking protocols Lido, EtherFi, and Kelp, as well as Ethena and Lombard. Chainlink remains the exclusive price oracle provider across all V4 markets.

Alongside the core protocol launch, Aave Labs introduced Aave Pro - an updated web interface for professional users. It serves as the primary entry point for V4 markets and is optimized for simultaneous operation across multiple hubs and spokes.

Targeting the real-world credit market

Aave V4 was designed for markets that previously remained beyond the reach of DeFi: structured lending, fixed-rate loans, and credit lines backed by tokenized real-world assets. The modular structure gives institutional participants the ability to create their own spokes with custom risk parameters while maintaining access to the deep liquidity of the hubs.

This at its core differentiates V4 from previous versions of the protocol. In V2 and V3, all borrowers operated in a single environment with identical rules. Now banks, investment funds, and fintech companies can configure credit products according to their own regulatory requirements without creating separate protocol forks.

Security: audits and public contest

Before deployment to mainnet, the protocol underwent multi-layered security review. Independent auditing firms conducted a full code audit, and the team applied formal verification and invariant testing. The final stage was a six-week public security contest in which hundreds of independent researchers participated.

The decision to activate V4 on Ethereum was made through an on-chain community vote. The vote followed the AIP (Aave Improvement Proposal) procedure, and the proposal received a convincing majority, although some community members expressed concerns about the migration timeline.

Market impact and outlook for Ukrainian users

The launch of Aave V4 comes due to growing institutional interest in decentralized finance. The protocol, which has already processed over $1 trillion in cumulative loans and holds approximately $27 billion in total value locked, now offers full-fledged infrastructure bridging traditional finance and DeFi lending.

For Ukrainian users, the growth of the Ethereum ecosystem opens new opportunities for participating in lending and staking protocols. Those looking to buy Ethereum with hryvnia to engage with DeFi protocols can compare current exchanger rates on Kurslog. The influx of institutional capital into Aave could support demand for ETH in the medium term.