[ARFC] Deploy Aave V4 on Avalanche
[ARFC] Deploy Aave V4 on Avalanche
Author: Aave Labs
Date: 2026-07-06
Summary
This ARFC proposes deploying Aave Protocol V4 on Avalanche Network.
Motivation
Aave V4's next growth phase involves expanding into networks with existing DeFi demand, active Aave usage, and a credible path to protocol revenue. The initial deployment on Ethereum Mainnet validated the Hub and Spoke model in a production environment, making this expansion the logical next step for V4.
Aave Labs proposes deploying Aave V4 on Avalanche, beginning with one Liquidity Hub and three Spokes. A dedicated real-world asset (RWA) hub will be launched in a later phase.
Avalanche has been a supported Aave V3 deployment since 2022, accumulating over five years of production operation. Its track record across liquidations, oracle performance, and market stress events within the Aave ecosystem establishes Avalanche as a proven network for Aave deployments. The existing market brings established distribution, active liquidity, and a mature user base, materially reducing execution risk for the activation of Aave V4 on Avalanche.
Following the passing of the TEMP CHECK Snapshot, this ARFC sets out the proposed launch topology, asset scope, oracle configuration, incentive structure, and rollout path.
Incentives Package
The Avalanche Foundation has committed up to $15,000,000 in milestone-based incentives tied to Hub launches and growth KPIs to bootstrap the V4 markets.
Specification
Hub and Spoke Configuration
The proposed initial Avalanche deployment will activate one Liquidity Hub and three Spokes; a Main Spoke, an AVAX Correlated Spoke, and a Forex Spoke.
| Hub | Assets |
|---|---|
| Avalanche Core Hub | wAVAX, sAVAX, BTC.b, USDC, USDT, wETH.e, EURC |
| Spoke | Collateral | Borrowable |
|---|---|---|
| Main Spoke | WAVAX, BTC.b, USDC, USDT, wETH.e, EURC | WAVAX, BTC.b, USDC, USDT, wETH.e, EURC |
| AVAX Correlated Spoke | sAVAX, WAVAX | WAVAX |
| Forex Spoke | EURC, USDC, USDT | EURC, USDC, USDT |
Dedicated RWA Hub: An RWA Hub is expected to be introduced through a follow-up proposal, with its own topology, asset scope, oracle configuration, and risk parameters, so that institutional collateral can be isolated from the core liquidity pool.
Risk Parameters
Dynamic Liquidation Bonus Configuration
For correlated-asset spokes (AVAX Correlated and Forex), liquidationBonusFactor is set to 1.0 because the health factor (HF) range between liquidation eligibility and bad debt is already narrow. Any reduction below this level would steepen the bonus curve and increase losses for leveraged correlated positions.
For volatile spokes (Main), healthFactorForMaxBonus is set to 0.9, ensuring that maximum liquidator incentives are active well before positions approach bad-debt levels. To maintain incentive continuity with V3, maxLiquidationBonus on the Main Spoke is set to 1.11 times its V3 value. This keeps the liquidation bonus at HF = 1.0 aligned with V3 while allowing higher incentives as positions deteriorate further.
| Chain | Hub | Spoke | Liquidation Bonus Factor | Target Health Factor | Health Factor For Max Bonus |
|---|---|---|---|---|---|
| Avalanche | Core Hub | Main Spoke | 90.00% | 1.2400 | 0.90 |
| Avalanche | Core Hub | AVAX Correlated Spoke | 100.00% | 1.0350 | 0.99 |
| Avalanche | Core Hub | Forex Spoke | 100.00% | 1.0442 | 0.99 |
V4 Spoke Parameters
The liquidation protocol fee is proposed to be set at 10% across all assets, aligning with the configuration used for the majority of assets on Aave V3.
| Chain | Hub | Spoke | Reserve | Collateral Factor | Max Liquidation Bonus | Borrowable | Collateral Risk | Liquidation Fee |
|---|---|---|---|---|---|---|---|---|
| Avalanche | Core Hub | Main Spoke | WAVAX | 73.00% | 10.00% | TRUE | 0 | 10.00% |
| Avalanche | Core Hub | Main Spoke | BTC.b | 75.00% | 7.22% | TRUE | 0 | 10.00% |
| Avalanche | Core Hub | Main Spoke | USDC | 78.00% | 5.55% | TRUE | 0 | 10.00% |
| Avalanche | Core Hub | Main Spoke | USDT | 78.00% | 5.55% | TRUE | 0 | 10.00% |
| Avalanche | Core Hub | Main Spoke | WETH.e | 83.00% | 5.55% | TRUE | 0 | 10.00% |
| Avalanche | Core Hub | Main Spoke | EURC | 0.00% | - | TRUE | - | - |
| Avalanche | Core Hub | AVAX Correlated Spoke | sAVAX | 95.00% | 1.00% | FALSE | 0 | 10.00% |
| Avalanche | Core Hub | AVAX Correlated Spoke | WAVAX | 0.00% | - | TRUE | - | - |
| Avalanche | Core Hub | Forex Spoke | EURC | 90.00% | 2.00% | TRUE | 0 | 10.00% |
| Avalanche | Core Hub | Forex Spoke | USDC | 90.00% | 2.00% | TRUE | 0 | 10.00% |
| Avalanche | Core Hub | Forex Spoke | USDT | 90.00% | 2.00% | TRUE | 0 | 10.00% |
Add and Draw Caps
Add and draw caps have been set, keeping in mind the limited liquidity available on Avalanche, with the specifications reflecting the hub-and-spoke structure of Aave V4 and the distinct risk profiles of each spoke.
| Chain | Hub | Spoke | Reserve | Add Cap | Draw Cap |
|---|---|---|---|---|---|
| Avalanche | Core Hub | Main Spoke | WAVAX | 500,000 | 50,000 |
| Avalanche | Core Hub | Main Spoke | BTC.b | 100 | 10 |
| Avalanche | Core Hub | Main Spoke | USDC | 5,000,000 | 5,000,000 |
| Avalanche | Core Hub | Main Spoke | USDT | 5,000,000 | 5,000,000 |
| Avalanche | Core Hub | Main Spoke | WETH.e | 3,000 | 300 |
| Avalanche | Core Hub | Main Spoke | EURC | 500,000 | 400,000 |
| Avalanche | Core Hub | AVAX Correlated Spoke | sAVAX | 200,000 | 0 |
| Avalanche | Core Hub | AVAX Correlated Spoke | WAVAX | 0 | 250,000 |
| Avalanche | Core Hub | Forex Spoke | EURC | 300,000 | 400,000 |
| Avalanche | Core Hub | Forex Spoke | USDC | 200,000 | 150,000 |
| Avalanche | Core Hub | Forex Spoke | USDT | 200,000 | 150,000 |
| Avalanche | Core Hub | Core Tokenized WAVAX Spoke | WAVAX | 150,000 | 0 |
| Avalanche | Core Hub | Core Tokenized BTC.b Spoke | BTC.b | 20 | 0 |
| Avalanche | Core Hub | Core Tokenized USDC Spoke | USDC | 1,500,000 | 0 |
| Avalanche | Core Hub | Core Tokenized USDT Spoke | USDT | 1,500,000 | 0 |
| Avalanche | Core Hub | Core Tokenized WETH.e Spoke | WETH.e | 600 | 0 |
| Avalanche | Core Hub | Core Tokenized EURC Spoke | EURC | 150,000 | 0 |
Tokenized Spokes serve as the standard entry point for integrators, vaults, aggregators, and other strategies routing liquidity into Aave V4 markets. They are supply-only and accept deposits exclusively in each hub’s primary borrowable assets, ensuring a simple, composable tokenized representation.
Interest Rate Curves
The parameters follow the same two-slope utilization curve used in V3, defined by a base variable borrow rate, slope below the optimal usage ratio (Slope 1), slope above it (Slope 2), and the optimal usage ratio itself (Uoptimal).
| Chain | Hub | Reserve | Base | Slope 1 | Slope 2 | Uoptimal | Liquidity Fee |
|---|---|---|---|---|---|---|---|
| Avalanche | Core Hub | WAVAX | 1.00% | 4.00% | 144.28% | 65.00% | 20.00% |
| Avalanche | Core Hub | BTC.b | 0.00% | 4.00% | 80.00% | 80.00% | 25.00% |
| Avalanche | Core Hub | USDC | 0.00% | 4.00% | 10.00% | 90.00% | 10.00% |
| Avalanche | Core Hub | USDT | 0.00% | 4.00% | 10.00% | 90.00% | 10.00% |
| Avalanche | Core Hub | WETH.e | 0.00% | 2.50% | 8.00% | 90.00% | 15.00% |
| Avalanche | Core Hub | EURC | 0.00% | 5.50% | 50.00% | 90.00% | 10.00% |
Next Steps
- If the ARFC Snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.
Disclaimer
Aave Labs is not receiving compensation from Ava Labs for this proposal or the potential deployment of Aave V4 on Avalanche.
Aave Labs is presenting this proposal as a service provider to the Aave DAO as part of its approved scope of work in support of DAO operations.
Copyright
Copyright and related rights waived via CC0.
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Discussion
Timeline
Jul 06, 2026Proposal created
Jul 07, 2026Proposal vote started
Jul 08, 2026Proposal updated