ave v4 is planned for Q4 2025 – This is what users should know

Decentralized Finance (DEFI) platform AAVE is releasing its V4 update, a major protocol upgrade that introduces new risk controls between the modular lending market and new features sometime in the fourth quarter of 2025.

According to AAVE’s update, the update introduces a “hub and spoke” modular design to AAVE to allow for a crypto-lending and lending market with more custom parameters without the need to capture liquidity in different silicon oxygen.

The liquidity center acts as a central pool of modular spokes; each spoke represents a different market, has one of three risk profiles, and has different borrowing and loan rates, replacing AAVE’s current flat rate. The team wrote:

“Each speech uses a hub to attract liquidity and returns to the base interest rate set at the hub level after repayment, and returns a specific asset risk premium associated with its accompanying composition.”

The update includes a new user interface that provides a “uniform, wallet-level view” of all modular spokes, allowing users to view detailed information and route transactions through different market modules that are uniformly outlined.

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The AAVE V4 will have a dynamic risk configuration to prevent unexpected location liquidation due to changes such as lowering the side-branch threshold.

If the user has multiple locations on, changing these global parameters in AAVE V3 will create a risk of liquidation.

The liquidation engine will also be transferred to a “targeted health” model where liquidation does not represent a fixed amount or the entire location, but is only sufficient to restore the loan to the required mortgage parameters, allowing the lender to collect when the borrower’s location is open.

Users will be able to select a “location manager” that can perform operations automatically, including withdrawals, borrowing, repayment and other transaction management features.

Additionally, the update will introduce a multi-universal feature that allows users to batch operations into a single transaction for easier execution.

AAVE’s V4 upgrade is scheduled to be released in the last three months of 2025, with the next step including the release of a white paper to make the V4 code base public and launching TestNet for the upcoming Defi protocol.

According to Defilama, the peak of the release peaked in December 2021 in the last bull market as Defi’s Total Value Lock (TVL) crossed the $156 billion mark.

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