Aave

Aptos

Decentralized finance (DeFi) platform Aave said it will release its V4 update, a major protocol upgrade, sometime in the fourth quarter of 2025, introducing modular lending markets and additional risk controls among new features.
The update introduces a “hub and spoke” modular design to Aave to allow for <a href="https://cointelegraph.com/news/what-is-crypto-lending-and-how-does-it-work" rel="noopener noreferrer nofollow">crypto borrowing and lending</a> markets with more custom parameters, without trapping liquidity in different siloes, according to an <a href="https://governance.aave.com/t/aave-v4-development-update/23043" rel="noopener noreferrer nofollow" target="_blank">update</a> from Aave.
Liquidity hubs act as central pools for modular spokes; each of the spokes represents a different market with one of three risk profiles and features different borrowing and lending rates, replacing Aave’s current uniform rates. The team wrote:
<blockquote>
 “Each Spoke registers with the Hub, draws liquidity, and, upon repayment, returns both a base rate set at the Hub level and an asset-specific risk premium tied to its collateral composition.”
</blockquote>
<figure>
 <img alt="Lending, Decentralized Exchange, Aave" src="https://s3.cointelegraph.com/uploads/2025-09/0199824d-7b5b-7c6f-9310-4bd33c18e7f4" title="">
 <figcaption style="text-align: center;">
 A diagram illustrating Aave V4’s “hub and spoke” architecture. Source: <a href="https://governance.aave.com/t/aave-v4-development-update/23043" rel="noopener noreferrer nofollow" target="_blank">Aave</a>
 </figcaption>
</figure>
The update includes a new user interface that gives a “unified, wallet-level view” of all the modular spokes, allowing users to see detailed information and route trades through different market modules from the unified overview.
Related: <a href="https://cointelegraph.com/news/aave-goes-live-on-aptos-ecosystem-expansion" rel="noopener noreferrer nofollow">$70B DeFi protocol Aave goes live on Aptos in ecosystem expansion</a>
Aave V4 will feature dynamic risk configurations to prevent unexpected liquidations of positions due to changes like lowering collateral thresholds.
Changing these global parameters in Aave V3 <a href="https://cointelegraph.com/news/alameda-research-liquidators-lost-72-000-during-a-fund-consolidation-attempt" rel="noopener noreferrer nofollow">created a risk of liquidation</a> if the user had multiple positions open.
The liquidation engine will also shift to a “health-targeted” model, where liquidations do not represent a fixed sum or the entire position, but only enough to bring a loan back up to the desired collateral parameters, allowing the lender to collect while leaving the borrower’s position open.
Users will have the option of selecting a “Position Manager” that can automatically execute actions, including withdrawal, borrowing, repayment and other transaction management features.&nbsp;
<figure>
 <img alt="Lending, Decentralized Exchange, Aave" src="https://s3.cointelegraph.com/uploads/2025-09/0199824f-04c5-7221-a0d9-67e91d72d2c7" title="">
 <figcaption style="text-align: center;">
 Aave V4 introduces a Position Manager that can execute actions on behalf of users. Source: <a href="https://governance.aave.com/t/aave-v4-development-update/23043" rel="noopener noreferrer nofollow" target="_blank">Aave</a>
 </figcaption>
</figure>
In addition, the update will introduce a multi-call feature, allowing users to batch actions into a single transaction for easier execution.
Aave’s V4 upgrade is <a href="https://governance.aave.com/t/aave-v4-launch-roadmap/23134" rel="noopener noreferrer nofollow" target="_blank">slated</a> for release sometime in the last three months of 2025, and the next steps include releasing a white paper, making the V4 codebase public, and launching a testnet for the upcoming version of the DeFi protocol.
<figure>
 <img alt="Lending, Decentralized Exchange, Aave" src="https://s3.cointelegraph.com/uploads/2025-09/0199824f-faa2-7d95-b1af-fb98f31235c7" title="">
 <figcaption style="text-align: center;">
 The total value locked in Aave crossed the $40 billion level in August. Source: <a href="https://defillama.com/protocol/aave?events=false" rel="noopener noreferrer nofollow" target="_blank">DeFiLlama</a>
 </figcaption>
</figure>
The launch is highly anticipated as total value locked (TVL) in DeFi crosses the $156 billion mark and is <a href="https://cointelegraph.com/news/defi-tvl-nears-2021-highs-liquid-staking-bitcoin-layer-2s" rel="noopener noreferrer nofollow">approaching peak levels</a> reached in December 2021, during the previous bull market, <a href="https://defillama.com/" rel="noopener noreferrer nofollow" target="_blank">according</a> to DefiLlama.
Magazine: <a href="https://cointelegraph.com/magazine/celeb-memecoin-hype-defi-comeback-waves-sasha-ivanov-x-hall-of-flame/" rel="noopener noreferrer nofollow">DeFi will rise again after memecoins die down: Sasha Ivanov, X Hall of Flame</a>

Aave’s V4 protocol upgrade is coming: Here’s what to expect

Cointelegraph

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