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Aave eyes V4 deployment on Avalanche with $15M in incentives

  • Aave Labs has proposed to roll out its V4 protocol on Avalanche, including a dedicated RWA hub.
  • Avalanche has committed up to $15 million in KPI-tied incentives linked to TVL, borrowing volume and protocol revenue growth. 
  • If approved by governance, the proposal will advance to an ARFC with details on token listings, risk parameters and deployment. 

Aave Labs has proposed deploying its V4 protocol on Avalanche, alongside a dedicated hub for real-world assets (RWAs), according to a Wednesday post on its governance forum.

The proposal outlines a plan to expand Aave’s presence on Avalanche by building on its existing V3 deployment and established user base.

Avalanche commits $15 million in push for Aave V4 integration

Avalanche has committed up to $15 million in incentives tied to key performance indicators (KPIs), including total value locked (TVL), borrowing activity and protocol revenue growth. The incentives are designed to support liquidity, integrations and long-term 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 for the proposal to bring Aave V4 into Avalanche,” Aave founder Stani Kulechov wrote on X.

A central part of the plan is the creation of a dedicated RWA hub. This structure would separate institutional collateral from retail markets, helping manage risk while enabling new forms of borrowing demand.

The decision comes as Avalanche announced a record $1.16 billion in distributed RWAs on its chain, a 58.4% rise in two weeks.

By launching on a network where Aave already operates, V4 would benefit from existing liquidity and active users. The performance-based incentives further align growth with measurable outcomes.

If approved, the plan will advance to an Aave Request for Comment (ARFC), where details around supported assets, risk settings, oracle design and deployment configuration will be specified.

A successful rollout on Avalanche could strengthen Aave’s multi-chain strategy and support further V4 expansions across other networks.

The announcement comes days after Babylon Labs suggested enabling native Bitcoin as collateral on Aave V4. The proposal aims to introduce a system that would 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% over the past 24 hours at the time of writing on Wednesday.

Author

Michael Ebiekutan

With a deep passion for web3 technology, he's collaborated with industry-leading brands like Mara, ITAK, and FXStreet in delivering groundbreaking reports on web3's transformative potential across diverse sectors. In addition to

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