Aave Gears Up for V4 Launch With Modular Lending Markets and New Risk Controls
The new design features dynamic risk settings and a “health-targeted” liquidation engine that sells only enough collateral to restore loan health, preventing mass liquidations.
V4 enhances user experience with a consolidated interface, a Position Manager for automated actions, and a multi-call function to batch transactions.
Aave is preparing to launch its V4 upgrade in the final quarter of 2025, a redesign that introduces modular lending markets, new liquidation mechanics, and enhanced user controls.
The update shifts Aave’s structure to a “hub and spoke” model. Liquidity hubs serve as central pools, while spokes represent individual markets with different risk profiles and lending parameters. Instead of uniform interest rates, each spoke will return a base rate from the hub plus a risk premium tied to its collateral mix.
Related: Judge Denies Justin Sun’s Bid to Block Bloomberg Report on Crypto Holdings
A new interface will give users a consolidated view of all spokes at the wallet level, enabling direct routing of trades across modules.
By decoupling functionality into independently deployable modules (Spokes), the architecture achieves three immediate benefits: more flexible risk management, easier support for asset classes with unique characteristics, and stronger liquidity network effects through Hub‑level pooling.
The protocol will also implement dynamic risk settings to avoid the mass liquidations that could occur in previous versions when collateral thresholds were adjusted.
Expect Mainnet Somewhere In Q4
The liquidation process itself moves to a “health-targeted” design. Rather than liquidating a fixed portion or an entire position, the engine will sell just enough collateral to restore loan health, preserving the borrower’s position while repaying lenders.
Additional features include a Position Manager that can automate borrowing, repayment, or withdrawals, along with a multi-call function to batch several actions into a single transaction.
According to the roadmap, the rollout of V4 will include the release of a whitepaper, publication of the codebase, and a testnet launch before mainnet deployment in Q4 2025.
Recently, Aave introduced Horizon, a permissioned (private) lending platform for institutions to pledge tokenised securities and borrow stablecoins on demand.
Related: SEC’s Project Crypto: Atkins Eyes Year-End ‘Innovation Exemption’ to Ease Digital Asset Rules
The post Aave Gears Up for V4 Launch With Modular Lending Markets and New Risk Controls appeared first on Crypto News Australia.
Filed under: Bitcoin - @ September 26, 2025 4:24 am