Aave Labs Unveils Ambitious Plans for Protocol V4: Enhancing GHO Stability and Cross-Chain Liquidity

Aave Labs proposed a significant upgrade to its protocol, aimed at enhancing features like its stablecoin GHO, introducing a Unified Liquidity Layer for better integration, and improving the protocol’s architecture for cross-chain liquidity across both Ethereum and non-EVM layer-1 platforms. The update also focuses on automatizing interest rates based on market conditions with Chainlink data oracles, adjusting borrowing costs with Liquidity Premiums based on collateral risk, and streamlining user management through vaults and smart accounts. Additionally, the proposal outlines improvements to GHO, including a more efficient liquidation engine and an emergency redemption mechanism for depegging scenarios. The development timeline extends from 2024 to a full release by mid-2025. The proposal is currently under community review to gauge sentiment before moving to an on-chain vote.