Aave, one of the leading lending platforms on Ethereum, has just announced plans to launch Aave V4 – an important upgrade aimed at significantly improving the experience in the decentralized finance (DeFi) space.

Aave V4: A step forward in the DeFi journey

Information was announced by the parent company Avara on December 12, marking a part of the project's long-term development strategy towards 2030. Currently, the upgrade is in the implementation and testing phase, with the testnet expected to launch in Q4 2024. The official version will be publicly released from Q1 to Q2 2025.

The Aave V4 version promises groundbreaking improvements, including:

  • Increase profits and reduce borrowing costs: Lenders will receive higher interest rates, while borrowers benefit from more attractive interest rates.

  • Improved GHO stablecoin experience: The use of Aave's native stablecoin will become smoother and more efficient.

  • New feature: Smart accounts

One of the highlights of Aave V4 is the smart account mechanism, which enhances the user experience. This feature allows users to manage multiple accounts without needing multiple wallet addresses, ensuring that collateral is protected from unauthorized loans, while also enhancing security and utility.

Unlike previous versions, where liquidity pools operated separately across chains with different interest rates and risks, Aave V4 will introduce a unified liquidity platform. This is achieved through integration with Chainlink's cross-chain interaction protocol, supporting cross-chain liquidity and optimizing operational efficiency across the entire ecosystem.

Aave is an open-source and non-custodial protocol that allows anyone to lend and borrow cryptocurrency through DeFi. Essentially, it provides a peer-to-peer money market for cryptocurrency, removing financial intermediaries from the equation.

Originally developed on the Ethereum blockchain, Aave has expanded to other chains like Polygon to enhance transaction speed and reduce costs. At the core of Aave is the use of smart contracts, allowing users to borrow and lend digital assets without the intervention of a central authority.

With Aave V4, the project aims not only to enhance user experience but also to promote the comprehensive development of DeFi applications, positioning itself as one of the pioneering platforms in the industry.

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