DeFi protocol Aave launches major update with V4 protocol

Aave Labs has announced its 2030 strategic roadmap, which includes several key initiatives such as Aave V4, a new visual identity, and expanded identification functionality.

On May 1, the DeFi lending platform launched a governance proposal called “Temperature Check” to solicit comments from the community on updating its protocol.

Central to the plan is the release of Aave V4, which will significantly improve the protocol’s user interface and expand its functionality across many blockchain networks.

The latest version of Aave has improved operational fluidity due to the inclusion of the Cross-Chain Liquidity Layer (CCLL), which allows seamless asset transfers between supported chains.

Aave also announced plans to integrate Real World Assets (RWAs) with its stablecoin GHO, in partnership with ChainLink. Launched in July 2023, the algorithmic stablecoin has a market cap of $49 million, making it a small player compared to rivals such as Tether (USDT) and USD Coin (USDC).

Recommendations for GHO include improvements to the liquidation engine, including “soft” liquidations and variable liquidation incentives, as well as improved GHO integration, including interest earning options.

An emergency payment mechanism for GHO depegging scenarios has also been proposed as part of the major upgrade.

The plan outlines a three-year development calendar. Aave Labs aims to engage with the community regularly, including through feedback sessions and annual reviews, to ensure that the progress of the project is aligned with community expectations and changing market conditions.

Aave Labs also advocated for a shift from a retroactive to a proactive funding model, relying on open budgeting and community approval before the start of the project. The planned budget consists of 15 million GHO and 25,000 stkAAVE for research, development and security audits in the first year.

Renewed visual identity

Aave also recommended updating its visual identity to better reflect its strategic future goals and increase brand awareness in the defi industry. The new design strives to convey a modern and distinctive image, consistent with Aave’s creative approach.

Aave Labs welcomed the broad participation of developers and community members in achieving its goals and emphasized that governance of the protocol will remain decentralized. Contributors are encouraged to actively participate in discussions and development processes, thereby shaping the future of the protocol.

Following community feedback, Aave Labs plans to revise and incorporate this into the official Aave Governance Framework before final approval. Documentation for this project is provided under a CC0 license, allowing open collaboration and comprehensive contributions.

At the time of writing, AAVE was trading at $83.41, up 3.4% in the last 24 hours, according to CoinMarketCap data. However, due to the recent decline in the global crypto market, the token fell 8% in the previous week.

AAVE 24-hour price chart | Source: CoinMarketCap