Aave announced its upcoming V4 upgrade, which will introduce a modular “Hub and Spoke” architecture designed to transform the protocol into a foundational operating system for DeFi.

The new system separates the platform’s liquidity storage from its market logic. Liquidity will be pooled into central “Hubs,” while “Spokes” will represent individual lending markets with custom rules and risk parameters. This structure allows multiple Spokes to draw liquidity from a single Hub, eliminating the need for new markets to bootstrap liquidity from scratch.

This shift from isolated markets to a unified infrastructure aims to solve liquidity fragmentation. It enables the creation of specialized markets that were not viable under the V3 model, such as a market for Pendle’s principal tokens or a dedicated Uniswap LP Spoke. By connecting diverse markets to a shared liquidity source, V4 is designed to enhance capital efficiency and security, positioning Aave to serve a wider range of on-chain financial applications.