Aave V4 has begun a capped launch introducing a two-layer market structure that separates collateral risk through Hub and Spoke architecture, with Prime, Core, and Plus Hubs operating distinct risk parameters. The isolation design limits contagion between collateral types and allows more granular rate-setting, which is expected to shift borrowing costs and utilization rates compared to V3 benchmarks.
For Armada's crypto repo desk, Aave rates on BTC, ETH, and SOL serve as a key external benchmark for competitive LTV and haircut pricing. The architectural change in V4 means historical V3 rate comparisons may not persist, and the Prime Hub in particular may set tighter rates for institutional-grade collateral. Desk should begin tracking V4 Hub rates separately from V3 to recalibrate competitive positioning.