According to CryptoPotato, Aave Labs, the team responsible for the DeFi lending platform Aave, has proposed a series of significant upgrades and expansions two years after launching its V3. The proposed enhancements include Aave V4, Aave Network, a Cross-Chain Liquidity Layer, non-EVM L1 deployments, and a new visual identity.
Aave V4 is set to be constructed with a new architecture that features an efficient and modular design, aiming to minimize disruptions to third-party integrators. The most crucial architectural change in this latest iteration is the proposed introduction of a Unified Liquidity Layer, which builds on the Portals concept introduced in Aave V3. This layer will provide a fully agnostic, independent, and abstracted infrastructure for liquidity provisioning. It is also proposed to manage supply/draw caps, interest rates, assets, and incentives while allowing other modules to draw liquidity from it. This would enable the Aave DAO to add or remove borrow modules without the need to migrate liquidity.
The primary function of this architectural approach is to facilitate the addition or improvement of borrowing features without overhauling the entire system or the liquidation module, while simultaneously addressing the issue of fragmented liquidity present in older versions of the protocol. The liquidity layer is capable of natively supporting both supplied and natively minted assets, thereby improving integration with GHO and other collateralized protocol-native assets. Aave V4 also proposes fully automated interest rates with adjustable slopes and kink points.
'Smart Accounts' is another feature proposed for introduction in the V4 iteration. This feature aims to streamline the user experience by eliminating the need for separate wallets to manage positions when borrowing using eMode or isolated assets. Users will be able to create multiple smart accounts within a single wallet, simplifying interactions with the protocol. The proposal also includes a dynamic configuration mechanism per asset, where users are 'hooked' to the current configuration of an asset when they borrow. If a new asset configuration is needed, a new instance is created while existing users remain hooked to the previous configuration.
Aave Labs is also collaborating with Chainlink to explore solutions for fully automating risk management. The concept involves using ad-hoc, on-chain feeds to assess asset risk and dynamically adjust risk parameters through control theory or artificial intelligence.
