The platform of Decentralized Finance (DEFI) AAVE releases its V4 update, a major protocol upgrade, once in the fourth quarter of 2025, which introduces modular lending markets and new risk controls to new features.
Updating introduces a “hub and spoke” modular design to allow to allow for Borrowing and lending crypto Markets with more custom parameters, without a lover of liquidity in different snares, according to a Update From AAVE.
Sili hubs act as middle pools for modular speakers; Each of the speakers represents another market with one of three risk profiles and features different borrowing and lending rates, replacing current AAVE uniform rates. The team wrote:
“Each speaker registers using the hub, taking liquidity, and, in payment, will return both a base rate set at the hub level and a premium that is a specific risk tied to the collateral composition.”
The update includes a new user interface that provides a “unified, wallet level” of all modular speakers, allowing users to see detailed information and route routes through various market modules from the unified overview.
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AAVE V4 will feature dynamic risk adjustments to prevent unexpected destruction of positions due to changes such as lowering collateral thresholds.
The change of global parameters to AAVE V3 create a risk of extermination If the user has many positions open.
The extermination machine will also move to a “Health-targeted” model, where fluids do not represent a fixed total or the whole position, but only enough to restore a loan to the desired collateral parameters, allowing the lender to collect while leaving the borrower’s open position.
Users will have the option of choosing a “position manager” that can automatically perform actions, including removal, borrowing, repayment and other transaction management features.
In addition, the update will introduce a multi-call feature, allowing users to batch the actions in a single transaction for easier implementation.
AAVE V4 upgrading is Slated For the release once in the last three months of 2025, and the next steps include the release of a Whitepaper, the public of the V4 Codebase, and launching a testnet for the upcoming version of the Defi Protocol.
Launching is highly expected as the total amount locked (TVL) on Defi crosses the $ 156 billion mark and approaching the climax levels reached in December 2021, in the previous bull market, According to In Defillama.
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