Aave V4’s core redesign rests on two components: Liquidity Hubs and Spokes. Hubs are immutable smart contracts that hold user deposits and track all supplied and borrowed balances across connected markets. Once deployed, their code cannot be altered, providing a stable foundation and reducing technical risks from upgrades. New assets can be added via governance, which the protocol classifies as a state change, not a code update.
Each blockchain running Aave V4 can host multiple Hubs, each with an independent balance sheet. On Ethereum, for instance, three Hubs are live: Core, Prime, and Plus. They do not share accounting, enabling market segmentation and risk isolation.
Spokes: Upgradeable Market Logic
User actions — supplying tokens, borrowing, repaying, withdrawing — occur through modular Spoke contracts. Each Spoke runs its own logic, including collateral parameters and liquidation rules. A key design choice: Spokes are upgradeable, so governance can adjust market rules without touching the core liquidity layer in Hubs. This separation isolates upgrade risks to the application level.
Per-Asset Credit Lines and Draw Caps
The Spoke-Hub connection is formalized through credit lines, set on a per-asset basis. One Spoke can interact with multiple assets from one Hub, each forming a dedicated credit line. Every line has an enforceable draw cap, similar to earlier borrow caps, enforced transaction-by-transaction. Governance can raise caps to expand market access or lower them to limit risk; setting a cap to zero halts new borrowing without forcing liquidation. Some Spokes hold credit lines to multiple Hubs, allowing users to post collateral in one Hub and borrow stablecoins or other assets from another — enabling cross-market liquidity management.
Overall, V4's hub-and-spoke model with per-asset credit lines delivers a more modular, risk-calibrated framework for decentralized lending. Governance gains the ability to make targeted adjustments for individual assets and markets, enhancing both safety and adaptability in the fast-evolving DeFi landscape.