What is expected in the development of AAVE?

Aave’s development plan is focused on expanding its multi-chain features, improving security, and launching version 4 (V4). Here are the main highlights:

1. Aave V4 Mainnet Launch (Q4 2025) – Introducing modular lending markets with shared liquidity hubs.
2. Aave V3 on Aptos Mainnet (Q4 2025) – First deployment on a non-Ethereum Virtual Machine (non-EVM) blockchain after thorough audits.
3. GHO as Fee Token on Base (Q4 2025) – Allowing GHO to be used for transaction fees through Chainlink’s CCIP.
4. Sonic Network Integration (Q4 2025) – Expanding to a new Layer 2 Ethereum scaling solution.

Deep Dive

1. Aave V4 Mainnet Launch (Q4 2025)

Overview: Aave V4 will introduce a “hub-and-spoke” design. Instead of separate liquidity pools, there will be unified Liquidity Hubs for each blockchain network. Connected to these hubs are “spokes,” which are customizable lending markets. This setup lets developers create specialized markets—like ones focused on low risk or high returns—while sharing the same pool of funds. The goal is to make launching new markets easier and to use capital more efficiently.

What this means:

• Positive: This could attract developers and institutions by offering more flexible and interconnected lending options across different blockchains.
• Potential challenge: If there are delays or technical issues with this new modular design, it could slow down adoption.

Source: Aave Governance, Cointelegraph.

2. Aave V3 on Aptos Mainnet (Q4 2025)

Overview: Aave is preparing to launch its V3 protocol on Aptos, a blockchain that doesn’t use the Ethereum Virtual Machine (EVM). The code has been fully tested and is currently being audited by security firms Certora and Spearbit. Additional internal reviews and specialized testing tools are in place to catch vulnerabilities before launch.

What this means:

• Positive: This expands Aave’s presence into Aptos’ fast-growing ecosystem, potentially bringing in new users.
• Neutral: Success depends on how well Aptos itself grows and attracts developers.

Source: Aave Governance.

3. GHO Activation as Fee Token on Base (Q4 2025)

Overview: After GHO stablecoin’s launch on Base (a blockchain network), Aave Labs and Chainlink are working to enable GHO to be used for paying transaction fees across chains using Chainlink’s Cross-Chain Interoperability Protocol (CCIP). This could increase GHO’s usefulness and demand.

What this means:

• Positive: This strengthens GHO’s role in decentralized finance (DeFi) payments and may help control its supply.
• Potential challenge: Regulatory concerns around stablecoins could impact this plan.

Source: Aave Governance.

4. Sonic Network Integration (Q4 2025)

Overview: Sonic is a new Layer 2 scaling solution for Ethereum. Aave plans to integrate Sonic into its platform, allowing users to manage their lending and borrowing positions on this network.

What this means:

• Neutral: Adds another blockchain option, but its success depends on Sonic’s adoption by users.
• Positive: Shows Aave’s ongoing commitment to supporting multiple blockchains for better accessibility.

Conclusion

Aave’s roadmap highlights efforts to improve scalability (with V4), security (through Aptos audits), and ecosystem growth (via GHO and Sonic). The V4 launch is especially important—it could reshape how decentralized lending works. The key question is whether these modular markets will attract enough users and funds to make the new design worthwhile. Keep an eye on testnet activity and governance discussions for updates.

What updates are there in the AAVE code base?

Aave’s platform received major upgrades in the third quarter of 2025, focusing on a flexible design, stronger security, and expanding across multiple blockchains.

1. Horizon RWA Market (August 27, 2025) – Launched lending on Ethereum for real-world assets like real estate and bonds.
2. v3.5 Upgrade (August 7, 2025) – Improved accuracy and safety features in the protocol.
3. V4 Development (Q4 2025) – Introducing a modular “hub-and-spoke” system for customizable lending markets.

Deep Dive

1. Horizon RWA Market (August 27, 2025)

What happened: Aave launched Horizon, a new lending market that lets institutions borrow stablecoins by using tokenized real-world assets (RWAs) such as property or bonds as collateral.

This update allows regulated organizations to bring assets that exist outside the blockchain onto the blockchain as collateral, expanding Aave’s use beyond just cryptocurrency assets. Horizon uses stricter identity verification (KYC/AML) through Aave Arc and verifies assets with Chainlink’s Proof-of-Reserve technology.

Why it matters: This is positive for AAVE because it connects decentralized finance (DeFi) with traditional finance, potentially bringing in more institutional investors. However, relying on centralized issuers of these real-world assets introduces some risks if those issuers fail to meet obligations. (Source)

2. v3.5 Upgrade (August 7, 2025)

What happened: This update improved the core math functions to prevent small rounding errors and introduced better internal accounting to reduce leftover tiny balances (“dust”) in user positions.

Key improvements include smarter liquidation logic to avoid unnecessary liquidations and standardized handling of the GHO debt token. These changes reduce risks, especially for users with small balances.

Why it matters: This update is neutral for AAVE’s value—it makes the system safer and more reliable but doesn’t add new features for users. Node operators had to upgrade by August 21, 2025, to keep the network running smoothly. (Source)

3. V4 Development (Q4 2025)

What’s coming: Aave V4 will move away from a single, all-in-one system to a modular “hub-and-spoke” design. This means there will be central liquidity pools (“hubs”) and separate lending markets (“spokes”) that can have customized risk settings and interest rates based on the type of collateral.

The upgrade will also introduce smarter liquidation processes that only partially close risky positions instead of fully liquidating them, plus batch processing of transactions to improve efficiency.

Why it matters: This is positive for AAVE because it could make lending more efficient and attract specialized markets. However, moving existing V3 positions to V4 might be complex in the short term. (Source)

Conclusion

Aave’s recent updates focus on attracting institutional users (Horizon), improving technical stability (v3.5), and preparing for future growth with a flexible design (V4). The protocol aims to bridge decentralized and traditional finance while scaling effectively.

The big question: Will V4’s new architecture help Aave maintain its leading 20% share of the DeFi lending market against competitors like Compound V4?

Why did the price of AAVE fall?

AAVE dropped 3.64% in the last 24 hours, underperforming the overall crypto market, which fell 2.57%. The main reasons include hitting technical resistance levels, traders taking profits after recent upgrades, and mixed feelings about shifts in the decentralized finance (DeFi) sector.

1. Technical Resistance – Couldn’t stay above the $289 price level
2. DeFi Sector Changes – Money moving to newer projects like AERO and IP
3. Profit-Taking After V4 Upgrade – Traders cashing out after upgrade news

Deep Dive

1. Technical Resistance (Negative Impact)

What happened:
AAVE struggled to stay above a key price point around $289, which is an important technical level known as the 50% Fibonacci retracement. It also couldn’t hold above its 30-day moving average, a common indicator of price trends. On shorter time frames, the price is moving down within a descending channel after falling below $280 support.

What this means:

• The MACD indicator shows weakening momentum, with mixed signals suggesting the upward push is losing strength.
• The RSI, which measures buying and selling pressure, is near neutral but leaning slightly bearish at 48.79.
• The next important support level to watch is $265, which could act as a floor if prices keep falling.

2. DeFi Fund Rebalancing (Mixed Impact)

What happened:
Grayscale, a major investment firm, adjusted its DeFi fund in the third quarter by removing MakerDAO (MKR) and adding Aerodrome Finance (AERO). This change slightly reduced AAVE’s share in the fund from 28.1% to 27.6% (Grayscale).

What this means:

• Institutional investors are shifting focus toward newer blockchain projects like AERO and those connected to artificial intelligence (AI), such as Story/IP.
• AAVE still holds a strong position but faces competition, with $6.6 billion in total value locked (TVL) compared to Uniswap’s $32.3 billion in the same fund.
• Keep an eye on AAVE’s percentage in Grayscale’s DeFi fund as a sign of institutional confidence.

3. V4 Upgrade Speculation (Positive Long-Term, Negative Short-Term)

What happened:
AAVE’s upcoming V4 upgrade, expected in the fourth quarter of 2025, plans to improve liquidity by connecting different blockchains through a hub-and-spoke system. Despite a 9% price rally last week, traders sold off afterward, a common reaction known as “selling the news” (The Defiant).

What this means:

• AAVE’s total deposits reached $75 billion on September 10, 2025, a 25% increase from the previous quarter.
• Some traders worry the new modular design might spread out fees, potentially reducing revenue concentration.
• The testnet for the upgrade is expected to launch in late October, which will be an important milestone.

Conclusion

AAVE’s recent price drop is mainly due to technical challenges and shifts in the DeFi market. However, its strong deposit numbers and the upcoming V4 upgrade’s promise to unify liquidity across blockchains suggest it has solid long-term potential. The key level to watch is the 200-day exponential moving average (EMA) at $253.77, which could indicate whether buyers can hold the line amid broader altcoin weakness.

What could affect the price of AAVE?

Aave is carefully upgrading its platform to keep up with changes in decentralized finance (DeFi).

1. V4 Upgrade (Q4 2025) – A new system that shares liquidity across blockchains could attract big investors.
2. Fee Growth & Buybacks – $600 million in monthly fees help buy back tokens, reducing supply.
3. Regulatory Challenges – Partnering with Kraken’s centralized platform might reduce Aave’s decentralized appeal.

In-Depth Look

1. V4 Liquidity Overhaul (Positive Outlook)

What’s happening:
Aave’s upcoming V4 upgrade, launching in late 2025, introduces a “hub-and-spoke” design. This means liquidity (funds available for lending and borrowing) will be pooled together across different blockchains instead of being split up. This fixes a problem from the previous version (V3), where separate markets competed for funds. Early partnerships, like using Uniswap V4 liquidity as collateral (The Defiant), could unlock over $50 billion in unused assets.

Why it matters:
By combining liquidity, Aave makes better use of capital, which has been a major hurdle for DeFi growth. If V4’s adoption matches the rapid growth seen in V3 back in 2021 (when total value locked grew 400% in six months), AAVE tokens could see increased demand from developers and investors looking for returns.

2. Revenue and Token Economics (Mixed Signals)

What’s happening:
In September 2025, Aave earned $600 million in fees—a 76% increase since March. Between 5% and 10% of these fees go toward buying back AAVE tokens each week, which reduces the number of tokens available and can support the price. However, most of this revenue (86.6%) still comes from the Ethereum blockchain (Blockworks), making Aave dependent on one network.

Why it matters:
While buybacks help control inflation of the token supply (83,000 AAVE tokens have been bought back since March), newer deployments on other blockchains like Scroll and Aptos are not yet profitable. Until V4’s cross-chain system is fully working, this reliance on Ethereum could limit growth despite positive tokenomics.

3. Regulatory and Market Risks (Caution Advised)

What’s happening:
The Aave community overwhelmingly approved (99.8%) launching a centralized finance (CeFi) version on Kraken’s Ink blockchain (CoinMarketCap). This move may attract regulatory attention. At the same time, MakerDAO’s exit from Grayscale’s DeFi fund shows investors shifting focus toward AI and Base blockchain projects.

Why it matters:
Combining centralized and decentralized finance (CeDeFi) could alienate core DeFi supporters without fully satisfying regulators. With Bitcoin and Ethereum ETFs dominating institutional investments, AAVE’s price has dropped 58% from its all-time high and is underperforming major cryptocurrencies. If interest in DeFi fades, capital might flow elsewhere.

Conclusion

Aave’s V4 upgrade and token buyback program offer promising short-term growth, but heavy reliance on Ethereum and regulatory uncertainties pose challenges for the future. The big question is whether shared liquidity pools can help Aave regain market share as Bitcoin continues to dominate. Keep an eye on how AAVE’s price moves relative to Ethereum after V4 launches—if they start moving independently, it could signal a comeback for alternative cryptocurrencies.

What are people saying about AAVE?

The Aave community is discussing some important trends, including a potential price drop, Ethereum’s impact, and key price points around $270 and $300. Here’s a quick summary:

1. Technical signs point to a possible 15% price drop
2. Ethereum’s price movement heavily influences AAVE
3. Short-term buying opportunities near $300

Deep Dive

1. @CryptoPulse_CRU: Rising wedge signals possible 15% drop bearish

“Price action is shaping into a rising wedge… downside target $222–238”
– @CryptoPulse_CRU (September 7, 2025, 1:30 AM UTC)
View original post
What this means: A rising wedge is a technical chart pattern that often signals a price drop. For AAVE, if the price falls below $270, it could trigger more selling, potentially pushing the price down to between $222 and $238.

2. @mkbijaksana: Ethereum’s all-time high (ATH) affects AAVE’s direction mixed

“If ETH breaks ATH, AAVE targets $576… else, correction to $250”
– @mkbijaksana (August 24, 2025, 5:41 PM UTC)
View original post
What this means: AAVE’s price depends a lot on Ethereum’s performance. If Ethereum reaches a new all-time high, AAVE could rise to $576. But if Ethereum struggles, AAVE might drop to around $250. This shows how decentralized finance (DeFi) tokens like AAVE are closely linked to Ethereum’s market trends.

3. CoinMarketCap Community: Bullish signs above $297 bullish

“AAVE reclaims $297 support… targets $325 if momentum holds”
– CoinMarketCap Community post (August 17, 2025, 4:38 AM UTC)
View original post
What this means: AAVE has bounced back above $297, which is a positive sign that buyers are stepping in. If this momentum continues, the price could reach $325. However, there is resistance near $305 that could slow progress.

Conclusion

The outlook for AAVE is mixed. Technical indicators suggest caution, especially if the price falls below $270, which could confirm a bearish trend. On the other hand, holding above $270 and strong moves in Ethereum could support a price rebound. Keep an eye on Ethereum’s price as it often influences AAVE and other DeFi tokens.

What is the latest news about AAVE?

Aave is making important upgrades while attracting institutional interest, as decentralized finance (DeFi) fees bounce back. Here’s the latest:

1. V4 Upgrade Aims to Create a DeFi Operating System (October 9, 2025) – New modular liquidity hubs will connect fragmented markets.
2. Grayscale Increases AAVE Holdings (October 3, 2025) – Their DeFi fund shifts focus to Base-chain liquidity, boosting AAVE’s role.
3. $600 Million in Fees Sparks Token Buybacks (October 7, 2025) – Higher revenue leads to buybacks that benefit AAVE holders.

In-Depth Look

1. V4 Upgrade Aims to Create a DeFi Operating System (October 9, 2025)

What’s happening:
Aave’s upcoming V4 upgrade, planned for late 2025, introduces a “hub-and-spoke” system. This means central liquidity pools (Hubs) will support smaller, specialized markets (Spokes). Instead of each market having to build its own liquidity, they can now share from a common pool. For example, a market for sUSDe stablecoins can instantly use liquidity from Ethereum’s main Hub without starting from zero.

Why it matters:
This could be great for AAVE because combining liquidity makes the platform more attractive to developers and big investors, which can increase usage fees. But it’s a complex change that requires careful coordination across blockchains and strong security for smart contracts. (The Defiant)

2. Grayscale Increases AAVE Holdings (October 3, 2025)

What’s happening:
Grayscale’s DeFi Fund (DEFG) swapped out MakerDAO for Aerodrome Finance (AERO), a decentralized exchange on the Base blockchain, and raised AAVE’s share to 28.1%. The fund now mainly holds Uniswap (32.3%), Aave (28.1%), and Ondo (19.1%), showing confidence in Aave’s role across multiple blockchains.

Why it matters:
This is somewhat positive for AAVE. Institutional funds like DEFG raise awareness but don’t always cause big price jumps. The move toward Base-chain assets fits with Aave’s expansion to other blockchains like Aptos, showing a broader strategy. (Crypto.news)

3. $600 Million in Fees Sparks Token Buybacks (October 7, 2025)

What’s happening:
Aave earned $600 million in fees during September, nearly double what it made in March. This growth is driven by borrowing demand for assets like sUSDe. The Aave DAO started a buyback program, using extra revenue to buy back AAVE tokens and support the ecosystem.

Why it matters:
This is good news for AAVE holders because more fees mean more value tied to the token. However, the token price has only risen about 8.2% weekly as of October 7, which is slower than fee growth, suggesting some investors are cautious about how long this trend will last. (CoinDesk)

Conclusion

Aave’s combination of technical upgrades, growing institutional interest, and strong revenue growth positions it as a key player in DeFi. While the V4 upgrade aims to fix liquidity issues, its success depends on attracting more institutional users. The big question: will shared liquidity pools help DeFi scale to the next level?