Decentralized lending protocol Aave’s entity Aave Labs recently released a governance proposal titled “Aave 2030,” which aims to determine the construction of the upcoming Aave V4 and the future expansion roadmap of the Aave protocol.
In a proposal published this week on the Aave governance forum, Aave Labs conducted a Temperature Check to assess community feedback on future protocol plans, including the construction of Aave V4. The new protocol version aims to optimize capital efficiency and seamlessly integrate Aave’s native stablecoin GHO. If approved, the initial development of Aave V4 is set to begin in the second quarter of 2024, with a full deployment planned for mid-2025.
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 functions will eliminate the liquidity fragmentation issues commonly found in earlier versions of the protocol. As this liquidity layer will natively support assets for “Supply” and minted assets, it will facilitate smoother integration with Aave’s GHO stablecoin and other collateral assets.
The protocol will also implement “Fuzzy 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 clear data source to enhance capital efficiency.
While Aave V4 will include many other features such as excess debt protection, improvements to the liquidation engine, and emergency redemption mechanisms, certain existing features will be deprecated. This includes credit delegation, fixed rates, position tokenization, and loan-to-value (LTV) configuration.
Aave Labs stated in the post:
In addition to Aave V4, Aave Labs has proposed projects such as Aave Network, Real World Asset (RWA) applications, cross-chain liquidity layers, and non-EVM L1 deployments.