DeFi
Aave offers a V4 iteration with a cross-chain liquidity layer
Aave v4 will pool liquidity from multiple networks via a cross-chain liquidity layer.
Aave, TVL’s largest DeFi lending protocol, has proposed launching a v4 iteration over the next three years.
Announced on May 1, Aave v4 will feature a unified cross-chain liquidity layer (CCLL), bringing together liquidity from multiple networks into a single protocol. Aave noted that CCLL would be powered by Chainlink’s Cross-Chain Interoperability Protocol (CCIP), which has completed its deployment without authorization last week.
“Aave may soon evolve into a fully cross-chain liquidity protocol,” the proposal states. “This will allow borrowers to access instant liquidity across all supported networks.”
Aave v4 will also feature automated adjustments to its interest rate curve, dynamic interest rate premiums for riskier assets, smart accounts and vaults allowing users to separate their borrowing activities, as well as as an updated liquidation engine.
Aave said it hopes to begin prototyping its v4 protocol in the fourth quarter and hopes to implement the code in the second quarter of 2025. However, it does not expect CCLL to be deployed until 2026 or 2027.
The proposal also outlines the launch of an Aave network, which would function as the main hub for the Aave protocol and the project’s GHO stablecoin.
Aave also plans to use a rollup type system Validium architecture for the network, adopting GHO as the network token for fees and using AAVE as the primary staking asset for decentralized validators and sequencers.
Aave indicated that it would monitor the evolution of Layer 1 and Layer 2 networks before finalizing the network architecture, but said that Aave Network would inherit its security from Ethereum.
The proposal added that “Ethereum would remain the home of the Aave DAO and governance of Aave” and that Aave and GHO would continue to operate as “multi-chain and network-agnostic despite Aave’s plans to launch a bespoke network “. Aave is also targeting 2026 or 2027 for the launch of Aave Chain.
Aave seeks to secure future dominance
Aave is the third largest DeFi protocol with a total value locked (TVL) of $10 billion, according to DeFiLlama.
Recent research from Token Terminal indicated that Aave has historically enjoyed popularity of around 50% DeFi lending market share over the past three years. Marc Zeller of Aave replied that approximately 75% of the value of DeFi lending protocols is locked in projects leveraging versions of Aave’s codebase.
Aave said its three-year plan aims to maintain its position as a DeFi leader for the rest of the decade. “These ideas aim to significantly boost adoption of the Aave ecosystem and scale DeFi to reach the next billion users,” the proposal states.
Aave’s three-year roadmap also includes promoting the development of real-world asset products built around GHO, expanding Aave onto networks that do not support Ethereum Virtual Machine smart contracts, and l the introduction of a new visual brand licensed by Aave DAO.
Aave is budgeting 15 million GHO and 25,000 stkAAVE ($2.1 million) to complete the first year of the roadmap, with the DAO providing 3 million GHO upfront and releasing the remaining assets over the next few years. First 12 months.
The price of AAVE has fallen 14% over the past week amid the recent downturn in digital assets, according to CoinGecko. Aave noted that over 450,000 wallets currently hold AAVE.
[CORRECTS ON 05/1 @ 5:10PM EST TO SAY AAVE IS CONSIDERING VALIDIUM, NOT PROPOSING IT]