Aave Labs, the entity behind the decentralized lending protocol Aave, has recently released a governance proposal called “Aave 2030” to determine the construction of the upcoming Aave V4 and the future expansion roadmap of the Aave protocol.
In a proposal published on the Aave governance forum this week, Aave Labs conducted a Temperature Check to evaluate the community’s feedback on the protocol’s future plans, including the construction of Aave V4. The new version of the protocol aims to optimize capital efficiency and seamlessly integrate Aave’s native stablecoin GHO. If approved, the initial development of Aave V4 will begin in the second quarter of 2024, with full deployment planned for mid-2025.
The proposed new features of Aave V4 include a more efficient architecture that will be completely different from the previous versions of the protocol. According to Aave Labs, the most significant change is the introduction of a “Unified Liquidity Layer,” which is a more flexible and efficient liquidity management approach. Aave Labs explains that these improvements to the lending function will eliminate the liquidity fragmentation issues commonly present in earlier versions of the protocol. The native support for both “Supply” assets and native minted assets in this liquidity layer will facilitate smoother integration with Aave’s GHO stablecoin and other collateral assets.
The protocol will also implement “Flexible Control” interest rates, which will automatically adjust based on market conditions to optimize rates for borrowers and suppliers. Aave Labs is collaborating with the blockchain oracle network Chainlink to develop a robust data source to enhance capital efficiency.
While Aave V4 will include many other features such as over-collateralization, improvements to the liquidation engine, and emergency redemption mechanisms, certain existing features will be deprecated. These include credit delegation, fixed interest rates, position tokenization, and loan-to-value (LTV) configuration.
In the post, Aave Labs also mentioned plans for Aave Network, real-world asset (RWA) applications, cross-chain liquidity layer, and non-EVM L1 deployments, in addition to Aave V4.
