Aave V4 has officially rolled out on the Ethereum mainnet after over two years in development. 

"We're aiming for sort of a controlled launch," Aave Labs CEO Stani Kulechov told The Block in an interview. "That's how we always deployed the Aave v3, Aave v2 and v1, in a very controlled training wheels manner."

The latest iteration of Aave is a fundamental reshaping of the largest decentralized lending protocol. V4 introduces a new "Hub and Spoke" architecture that enables greater flexibility when spinning up new lending markets. 

Aave's hubs will act as concentrated sources of liquidity that different financial markets can tap into, while each spoke can maintain distinct risk parameters, independent borrowing environments, and governance-controlled features.

The more flexible platform is designed to support a growing range of real-world credit markets — including structured lending, fixed-rate borrowing, and tokenized asset-backed credit — at a time when Wall Street is finally beginning to express genuine interest in onchain finance. 

"The future of DeFi is that native assets and use cases will keep growing, and Aave is going to be a leader there," Kulechov said. "But also, Aave is going to be a pioneer in actually bringing DeFi liquidity and DeFi infrastructure to any sort of viable lending model."

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Aave V4 architecture 

In addition to addressing the "liquidity bootstrapping challenge" when launching a new use case, Aave's hub-and-spoke model also has risk mitigation aspects by design. 

Kulechov noted that there will be three liquidity hubs to start, each with defined risk profiles. "Prime is the low risk, Core is the risk-adjusted, and Plus is the risk return," he said. "And then the spokes and the asset listings within the spokes can be configured appropriately."

"Whenever you have a new use case, that use case is onboarded into the spoke," Kulechov said. "The hub gives a credit line to each spoke. Every single use case is capped by the exposure of the credit line, so that's like a risk mitigation feature."

Risk mitigation also comes at the programable level, with V4's flexible "institution-specific market configurations" and support for a broader range of collateral types. The system allows risk to be "priced more precisely at the collateral level, aligning borrowing costs with underlying exposure and improving capital efficiency," a press release said. 

At launch, some of the biggest onchain applications including Lido, EtherFi, Kelp, Ethena, and Lombard plan to operate spokes.

Kulechov noted that users will not immediately be able to permissionlessly spin up spokes, at least while V4 still has its training wheels on. 

"It's going to be DAO-governed," Kulechov said. "But in the future, there's an ability to actually create permissionlessness. The question is whether the model is safe."

Security and extensions

V4 reportedly underwent over a year of security testing, including the past eights months dedicated to "hardening its security infrastructure," Kulechov said. Aave said it operated under a "security-first framework," where smart contract protections were embedded from the earliest architectural stages rather than treated as a final pre-launch audit.

"I'm very excited to see Aave V4 go live as this is a major milestone toward connecting onchain finance directly to broader global capital markets with the security and reliability required for mainstream adoption," said Sergey Nazarov, co-founder of Chainlink, a longtime Aave partner. 

The core Aave protocol — from V1 to now — has never been hacked on any of its multi-chain deployments. 

Although Kulechov confirmed there may be multi-chain extensions for V4, the team may take a more conservative approach to deployments. V3 was extended to nearly two dozen chains. In recent months, Aave DAO has discussed scaling back deployments on less active chains like kSync, Metis, or Soneium.

"Aave is a piece of software that should just exist where there is a financial opportunity that is big enough to actually run the software there. That's how I think about it," Kulechov said. He added there are no plans for Aave to develop its own bespoke Layer 2, when asked. 

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Aave launched on OKX's X Layer on Monday. 

Alongside V4, Aave Labs is also rolling out its new web interface called Aave Pro, designed for DeFi-native advanced users. 

Investment modules

Earlier this month, Aave Labs published a blog post outlining Aave V4's Reinvestment Module, which is designed to automatically "sweep" unused liquidity not deployed in spokes into pre-defined low-risk strategies. 

"So, for example, when the rates are lower than the software rates on Aave, that liquidity can be resupplied into these opportunities," Kulechov said. 

V4 will also integrate the Aave-native GHO stablecoin more deeply into the stack, with the yield-bearing sGHO, serving as a kind of onchain savings product. The upgraded platform will also support lending collateralized by NFTs and data, Kulechov said. 

Aave will win? 

The V4 launch comes amid a significant moment for Aave following months of governance turmoil that has seen two significant contributors BGD Labs and the Aave Chan Initiative announcing departures.

Last month, Kulechov published a proposal, titled "Aave Will Win," looking to address criticisms that Aave Labs had unaccountable influence by essentially turing the company into a DAO subsidiary, including redirecting its revenue streams to the DAO and transferring its IP and Aave brand assets to DAO controlled legal entity.

While he is still interested in reforming Aave Labs, he also argued that Aave DAO needs to evolve. "The direction is less bureaucracy, more slim, lean governance, and using it where it matters," Kulechov said. "More execution and less politics."

V4, for Kulechov, represents a kind of startup opportunity for a legacy DeFi brand like Aave, especially given the rising institutional interest in crypto. Its modular architecture makes it not only attractive for lenders, but also potentially a whole new host of borrowers, Kulechov argued.

That's part of the reason why in his Aave Will Win proposal, he argued for deprecating V3, despite its significant revenues. 

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"Capital goes where the best risk adjusted opportunities are," Kulechov said, noting that there's a surplus of liquidity in DeFi. "Now what we want to focus is on the borrow side, creating significant borrow demand by using the onchain liquidity and channeling that back into the real economy where we have funding opportunities, whether it's institutions, consumers or businesses."