Aave Labs has proposed deploying its V4 protocol on Avalanche, in addition to a dedicated hub for real-world assets (RWAs), according to a Wednesday after on its board forum.
The proposal outlines a plan to expand Aave’s presence on Avalanche by building on its existing V3 implementation and established user base.
Avalanche commits $15 million to integrate Aave V4
Avalanche has committed up to $15 million in incentives tied to Key Performance Indicators (KPIs), including Total Value Locked (TVL), lending activity and protocol revenue growth. The incentives are intended to support long-term liquidity, integrations, and adoption, rather than short-term usage spikes.
According to the proposal, Aave Labs selected Avalanche due to its strong performance under Aave V3, deep stablecoin liquidity, and growing activity around tokenized assets.
“Avalanche has always been a strong partner for Aave and has built a very strong DeFi community over the years. Excited about the proposal to bring Aave V4 into Avalanche,” said Aave founder Stani Kulechov wrote on X.
A central part of the plan is the creation of a special RWA hub. This structure would separate institutional collateral from retail markets, allowing for better risk management while enabling new forms of loan demand.
The decision comes as Avalanche announced a record $1.16 billion in distributed risk-weighted assets across its chain, up 58.4% in two weeks.
By launching on a network where Aave is already active, V4 would benefit from existing liquidity and active users. The performance-based incentives further align growth with measurable results.
If approved, the plan will proceed to an Aave Request for Comment (ARFC), where details about supported assets, risk settings, oracle design, and deployment configuration will be specified.
A successful Avalanche rollout could strengthen Aave’s multi-chain strategy and support further V4 expansions across other networks.
The announcement comes days after Babylon Labs proposed enabling native Bitcoin as collateral on Aave V4. The proposal aims to introduce a system that will allow users to supply BTC without relying on bridges or wrapped tokens, potentially expanding Bitcoin’s role in decentralized finance.
AVAX and AAVE are down 1.1% and 2.2% in the past 24 hours at the time of writing on Wednesday.