V4 is about to launch, instantly igniting market enthusiasm. It is anticipated whether it can usher in a 'second spring'.
From lending protocol to DeFi cornerstone, AAVE started from ETHLend in 2017, and has now reached a lock-up volume (TVL) of $70 billion, becoming a DeFi giant.
Its version iterations represent the evolution of DeFi lending:
V1 (2020): Introduced liquidity pools, replacing the P2P model, enabling instant lending, and quickly capturing the market.
V2 (End of 2020): Introduced flash loans and debt tokenization, giving rise to an arbitrage ecosystem and paving the way for yield aggregators.
V3 (2022): Focused on cross-chain interoperability, becoming a multi-chain liquidity connector, establishing AAVE as the pricing benchmark in DeFi.
However, the limitations of V3 are gradually becoming apparent: Liquidity fragmentation (inefficient flow of funds across chains), slow innovation (governance processes take months), and insufficient customization (difficult to meet differentiated needs such as RWA and GameFi). These issues make AAVE urgent for a breakthrough, and V4 is the answer.
V4 upgrade: Modular restructuring of lending. The core of V4 is the 'Unified Liquidity Layer', adopting a Hub-Spoke model: Hub: Aggregates all liquidity.
Spoke: Responsible for specific business, each Spoke can customize rules and risk parameters.
This means AAVE can flexibly respond to different needs. For example, Frax Finance can set up a dedicated Spoke to support frxETH and FRAX, while institutional Spokes may require KYC and offer lower interest rates. The Hub-Spoke model resolves the contradiction between 'deep liquidity' and 'risk isolation', achieving a balance between unified management and flexible customization. Other highlights: Dynamic risk premium: Interest rates are dynamically adjusted based on collateral quality and liquidity, with WETH enjoying low rates, while more volatile assets incur premiums, enhancing safety and fairness.
Smart accounts: A single wallet managing multi-chain assets and strategies, simplifying operations.
Cross-chain and RWA: Achieved second-level cross-chain interactions through Chainlink CCIP, supporting non-EVM chains like Aptos, and integrating real-world assets (such as tokenized government bonds), paving the way for institutional capital entry.
Market response: Data is impressive, and the community is optimistic. Despite recent volatility in the crypto market, AAVE's performance remains outstanding: Trading volume: 24-hour total network trading volume reached $18.72 million, far exceeding Uniswap ($7.2 million) and Lido ($3.65 million).
TVL: August surged by 19%, approaching $70 billion, reaching an all-time high, ranking first in TVL on the Ethereum chain.
Net assets: Reached $132.7 million, growing 130% over the past year.
Open contracts: Over $430 million, a six-month high.
The community is highly anticipating V4's modular architecture, cross-chain expansion, and RWA integration, believing these upgrades will enhance capital efficiency and DeFi composability, propelling AAVE to new heights.
