Hassan Maishera
On Tuesday, Aave Labs announced via X that a new proposal has been submitted seeking to deploy Aave V4 on Monad.
This proposal recommends deploying an Aave V4 instance on the Monad Network, with an initial market structure designed to support tokenized equities and cash equivalent assets.
The proposed instance would use a hub-and-spoke architecture to separate assets according to their underlying risk profiles while maintaining access to shared stablecoin liquidity. The structure is designed to limit cross exposure between assets with materially different volatility profiles and provide a framework that can scale as the tokenized equities market develops.
The initial $15M incentive budget allocated by the Monad Foundation under the Aave V3.7 deployment proposal will also be used to support the transition to and growth of Aave V4 on Monad.
The incentive budget is intended to support liquidity growth and adoption of the V4 deployment, with the specific allocation and distribution strategy to be determined as the deployment progresses.
Per the proposal, the Core Assets Spoke contains lower volatility collateral, Growth Assets Spoke contains higher volatility names, and Emerging Listings Spoke is reserved for assets with limited history or exceptionally high volatility.
USDC and USDT0 provide the borrow liquidity across all spokes, while tokenized equities and cash equivalents are collateral only.
Aave is a decentralized finance protocol that allows people to lend and borrow crypto. Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a flash loan using this liquidity.
Aave (which means “ghost” in Finnish) was originally known as ETHLend when it launched in November 2017, but the rebranding to Aave happened in September 2018. (This helps explain why this token’s ticker is so different from its name!)
AAVE provides holders with discounted fees on the platform, and it also serves as a governance token — giving owners a say in the future development of the protocol.
Aave protocol is a decentralized, open-source, and non-custodial money market protocol. Depositors earn interest by providing liquidity to lending pools, while borrowers can obtain overcollateralized loans by using the liquidity from these pools. AAVE is trading at $159.63 per token, down 2.1% in the last 24 hours.
The project allows people to borrow and lend in about 20 cryptocurrencies, meaning that users have a greater amount of choice. One of Aave’s flagship products is “flash loans,” which have been billed as the first uncollateralized loan option in the DeFi space. There’s a catch: they must be paid back within the same transaction.
