Aave V4 Unveils Radical New Architecture

Aave has officially revealed its upcoming V4 architecture, marking a major evolution in DeFi lending design. The protocol’s next iteration replaces the current siloed market structure of V3 with a Hub-and-Spoke system , a move that promises greater capital efficiency, modularity, and flexibility across chains.

Aave V4 is still under development, but the team has offered a detailed first look at how it will work, how it compares to V3, and what makes it different.

From Siloed Markets to Unified Liquidity

In Aave V3, liquidity is locked within isolated markets on different chains or networks. Each market — such as Ethereum Core or Prime — has its own liquidity pool and asset set. That structure fragments capital and makes cross-market borrowing or lending inefficient.

Aave V4 flips this model.

In V4, all assets on a given network are pooled inside a Liquidity Hub. Rather than users interacting directly with these Hubs, they interact through Spokes, modular gateways that access the Hub’s liquidity under specific rules.

What Are Liquidity Hubs?

Each Layer 1 or Layer 2 will have at least one Liquidity Hub. These Hubs act as central vaults for all assets on that network. The Hub:

• Tracks assets and interest using a share-based system
• Sets limits on how much each Spoke can borrow
• Ensures system-wide integrity (e.g., borrowed assets never exceed supplied assets)

Liquidity Hubs unify capital and simplify management, increasing usage and unlocking better borrowing rates.

What Are Spokes?

Spokes are user-facing modules that plug into the Liquidity Hub. Every lending or borrowing action happens through a Spoke — not the Hub itself. Each Spoke can have:

• Its own asset rules and risk profiles
• Unique collateral types