Aave launches V4 on Avalanche with Hub & Spoke

Aave launched V4 on Avalanche, deploying a Hub & Spoke architecture that allows specialized lending markets to set their own collateral rules and risk parameters while drawing on shared liquidity at a common hub.

The design separates individual markets, or “spokes,” from the pooled liquidity “hub.” Each spoke can define eligible collateral, loan terms and liquidation rules while accessing the hub’s liquidity to improve capital use and reduce fragmentation between markets.

Aave plans one of the first specialized markets on Avalanche to support borrowing against tokenized real‑world assets, expanding the types of collateral the protocol can accept compared with earlier versions.

Aave is the largest decentralized lending protocol by total value locked, holding nearly $14 billion in assets across 23 blockchains, according to DeFiLlama data.

The protocol’s V4 architecture is intended to support a wider range of tokenized collateral, including US Treasurys, tokenized money market funds, private credit and corporate bonds, with each market able to set customized collateral requirements and risk controls.

Financial firms and market infrastructure providers are building systems and partnerships to let institutions use tokenized assets as collateral while preserving regulated custody and improving valuation and settlement processes. Institutional arrangements announced in recent months include facilities and integrations intended to link traditional credit workflows with on‑chain asset handling.

On‑chain data shows more than $34 billion of real assets are currently tokenized on public blockchains, up from about $12.8 billion a year earlier, according to RWA.xyz.

The Avalanche deployment is the first time Aave’s V4 architecture has been deployed off Ethereum. The release enables the protocol to add more specialized markets and asset types on other chains where market operators choose to launch spokes.