Aave's V4 Upgrade Reshapes DeFi Lending with Modular Hubs and Institutional Focus
Aave has launched its long-awaited V4 upgrade on the Ethereum mainnet after more than two years of development. The platform, which dominates around 60% of the decentralised finance (DeFi) lending market, has now processed over $1 trillion in total loans. This latest version introduces major changes to its structure and goals. The new V4 system replaces the old single-pool design with a modular 'hub-and-spoke' model. It features three liquidity hubs—Prime, Core, and Plus—alongside individual lending markets called spokes. Partners like Lido, EtherFi, Kelp, Ethena, and Lombard will operate these spokes at launch.
Aave's focus has shifted toward attracting institutional borrowers and real-world credit activity. The upgrade also deepens support for its native GHO stablecoin and expands collateral options to include NFTs and data-backed assets. However, the rollout comes amid internal changes. BGD Labs, a key technical contributor, announced its exit from Aave on 1 April. Additionally, the Aave Chan Initiative, responsible for 61% of governance actions, is shutting down after a dispute with Aave Labs over funding. CEO Stani Kulechov has proposed restructuring Aave Labs into a DAO-controlled subsidiary, transferring its assets to the community.
The V4 launch marks a significant shift in Aave's architecture and strategy. With a more flexible system and broader asset support, the platform aims to bring traditional finance into DeFi. Meanwhile, governance changes and team departures signal a transition in how the project will be managed moving forward.
