Aave V4’s Arc Markets Connect Dollar-Euro Loans to Shared Liquidity

Aave V4 on Circle’s Arc blockchain gives borrowers a dedicated dollar-euro lending market alongside a broader crypto-backed market, with both drawing funds from the same liquidity hub. The deployment went live Sept. 16 with $USDC, $EURC, wrapped Ether and Circle’s wrapped Bitcoin, cirBTC.

The practical distinction is collateral: the Forex market lets users pledge either $USDC or $EURC to borrow the other. Arc’s Main market accepts $USDC, WETH and cirBTC as collateral, but not $EURC, according to the deployment configuration. That gives euro-token holders a route to dollar borrowing without selling their $EURC.

Aave said Oct. 12 that its Arc deployment had crossed $300 million in deposits. Arc highlighted the markets in an Oct. 15 walkthrough featuring Kolten of Aave. Onchain logs show the Core Hub processing supplies and borrowing through the Main market on Oct. 15.

Two Markets, One Liquidity Source

In V4, users interact with borrowing modules called spokes. Those modules send deposits to a hub and draw loans from it, while maintaining separate collateral settings and limits. Aave’s documentation describes this as a change from V3’s market-per-pool design: connected markets can use shared liquidity rather than each needing a separate deposit base.

Arc launched with one Core Hub and two borrowing markets. All four launch assets are borrowable in Main; Forex is limited to $USDC and $EURC. Separate supply-only tokenization spokes turn deposits into positions that external vaults and aggregators can use, without enabling borrowing through those integrations.

The launch configuration adopted LlamaRisk’s token-denominated supply and borrowing limits. For Main, those were 56 million $USDC supplied and 51 million borrowed; 20 million $EURC supplied and 18 million borrowed; 1,100 cirBTC supplied and 220 borrowed; and 24,000 WETH supplied and 4,800 borrowed.

Forex’s initial limits were 13 million $USDC supplied and 11 million borrowed, plus 10 million $EURC supplied and 9 million borrowed. LlamaRisk cited limited secondary-market liquidity for $EURC as the reason for conservative Forex caps. These are launch limits, not a current reading of remaining capacity.

Ethereum’s V4 deployment also uses shared hub liquidity and has a Forex Spoke listed in Aave’s contract directory. The Defiant previously reported on Arc’s contribution to V4’s September growth.

Arc also carries network-level controls relevant to borrowers. In its prelaunch technical assessment, Aave Labs said $USDC is Arc’s gas asset and an issuer freeze can stop an address transacting altogether. Its tests found that a frozen borrower’s position could still be repaid or liquidated by a third party.