Discover the latest in decentralized finance as Aave, a prominent DeFi lending platform, introduces its V4 protocol overhaul.
Aave Labs created a plan for its upcoming system version. The ultimate goal is to improve GHO, their stablecoin.
The business that developed the Aave DeFi lending technology is named Aave Labs. Throughout the following five years, they intend to update and enhance their system. It serves as a kind of road map for their upcoming projects.
The DeFi lending platforms requested suggestions from the community on May 1. They would like to know what people think about the version 4 upgrade to their system.
Aave Network expansion is a major focus of the concept. Enhancing the cross-chain liquidity layer is their goal. They also want to include layer 1 deployments of non-Ethereum Virtual Machines (EVMs) and create a new look for the system.
Aave V4 will use a new framework. One feature that will be offered is a “Unified Liquidity Layer.” The addition of features like isolation pools and risk modules will be simpler to put in place with this layer. It will also enhance the functionality of their stablecon, GHO, inside the framework.
The plan calls for a few novel features. First, interest rates are subject to market fluctuations and might fluctuate. To assist with this, they want to use Chainlink data oracles.
The proposal also mentions liquidity premiums. These would change the borrowing fees based on the riskiness of the collateral. They also want to build smart accounts and vaults. Users would find it easier to manage their positions.
The proposal discussed GHO, Aave’s stablecoin. Although it launched in July 2023, it is far less significant than other stablecoins such as USD Coin (USDC) and Tether (USDT). The coins have a market value of $49 million, but they are only worth $1 each.
One of the suggestions for GHO is to improve the liquidation engine. The main goal is to improve liquidations by adding features like various bonuses and also by using GHO based on providing an alternative for earning interest.
As part of the major upgrade, an emergency redemption method for GHO de-pegging circumstances was also suggested. Before going to a chin vote, the proposal is in the “temperature check” phase, which gauges community sentiment.
It describes the development schedule that runs from the end of research in Q2, 2024, to the mid-2025 release of V4 in its entirety.
Aave Lab is requesting funding. The combined value of the 15 million GHO and 25,000 STK AAVE tokens that they demand is around $17 million. This money is for the first year of their three-year plan.
DefiLIama states that Aave is the third largest DeFi protocol, with a total locked value of almost $10 billion.
The value of AAVE, the native token of Aave, was $82.35, at the time of writing.
Its lowest price of $660 three years ago dropped by 87.6%, and it has dropped by 9% in the last week.
