Aave V4 Proposal: Aave Labs Announces New Upgrades and Expansion Plans

Crypto News – Two years after launching its V3, Aave Labs, the company behind the DeFi lending platform Aave, has put out several significant improvements and additions. Aave V4, Aave Network, a Cross-Chain Liquidity Layer, non-EVM L1 deployments, and a new visual identity are among the recommended enhancements.

Aave V4 Proposal: Aave Labs Announces New Upgrades and Expansion Plans

Aave V4 will be constructed with a new architecture with an effective and modular design, with the goal of minimizing interruptions to third-party integrators, according to the most recent blog post. The planned creation of a Unified Liquidity Layer, which builds on the Portals concept first described in Aave V3, is the most significant architectural modification of the most recent version. An entirely autonomous, abstracted, and agnostic infrastructure for liquidity provisioning is made possible by this layer.

Along with allowing other modules to draw liquidity from it, it is also suggested to handle interest rates, assets, incentives, and supply/draw caps. As a result, the Aave DAO would be able to modify its borrow modules without requiring a liquidity migration.

What’s New in Aave V4?

This architecture solution primarily addresses the problem of fragmented liquidity found in previous iterations of the protocol while also making it easier to add or enhance borrowing capabilities without completely redesigning the system or the liquidation module.

According to Aave’s proposal, the liquidity layer can handle natively minted and supplied assets, which improves interoperability with other collateralized protocol-native assets like GHO. Additionally, completely automated interest rates with kink points and changeable slopes are suggested by Aave V4.

Another suggested feature for the V4 version of Aave is called “Smart Accounts,” which aims to improve user experience by resolving a significant problem with the Aave V3: doing away with the requirement for different wallets to manage positions while borrowing utilizing eMode or isolated assets. The ability for users to create several smart accounts in a single wallet will streamline protocol interactions.