Aave Labs has submitted a board proposal to implement Aave V4 in Ethereum Mainnet, counting on a security-first rollout and an updated modular architecture to restore confidence in the protocol.
The proposal, submitted on March 13, 2026 to the Aave governance forum, describes a system built around Liquidity Hubs and Spokes, which are shared capital pools that the credit markets, each with their own risk parameters, can tap into through capped lines of credit.
The governance event comes after integral members of the platform’s DAO announced it won’t will renew their contracts, indicating a misalignment of objectives, which are also related to the proposed V4.
The $AAVE token has fallen to $110 at the time of writing, after trading very close to $120 the day before.
The Aave price has fallen to $110 after trading near $120 the day before. Source: CoinMarketCap
Zeller criticizes Trading returns of $50 million that almost returned Nothing
A transaction executed via the CoW protocol via Aave’s interface on March 12 was intended to convert the user’s $50 million aEthUSDT into Aave. Instead, the order hit trading pools with very little liquidity and caused a near-total price impact, leaving the user with about $36,000.
Aave founder Stani Kulechov said the interface had issued warnings about extraordinary slippages to the user and asked him to confirm it via a checkbox before proceeding with the transaction.
“The transaction could not proceed without the user explicitly accepting the risk,” he said of X, adding that CoW Swap’s routers had functioned as intended. However, he acknowledged that the outcome was far from optimal.
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Aave said it would refund approximately $600,000 in fees collected for the transaction and was attempting to contact the affected user.
Marc Zeller, the founder of Aave Chain Initiative (ACI), who has expressed his recent criticism of Aave, stated that the previous Aave frontend had imposed a hard slip cap of 30%, with any trade exceeding this being rolled back. “Users can now enjoy the great DeFi energy of 99% slippage,” he wrote on X.
Zeller wrote in a separate post the next day that Aave was originally designed by people who put user protection at the heart of the product logic.
However, he believes this philosophy appears to have shifted. “Aave has new chefs in the kitchen now,” he wrote, “andd mindset seems different.”
The V4 upgrade has divided the Aave ecosystem
The administrative tensions surrounding V4 go deeper than the recent incidents.
In February, BGD Labs, the company that was Aave’s top technical contributor for four years, announcedd it would not renew its involvement in the DAO after the contract expired on April 1, 2026, citing concerns about centralization at Aave Labs and what it described as an unfair portrayal of Aave V3’s track record to build the case for V4.
That announcement followed a turbulent snapshot over a proposal from Aave Labs known as “Aave Will Win,” which sought approval for up to $51 million in stablecoins and $75,000. $AAVE tokens to fund product development and marketing with a heavy focus on V4.
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The vote passed with approximately 52.6% in favor, but Zeller and the ACI did not support the proposal. Its death led to the Aave DAO delegate announcing that this was the case won’t will renew its commitment to the DAO, a decision that dismisses one of the most active governance contributors to the protocol.
What’s next for V4?
As for the commercial foundations of the protocol, the picture is less bleak. The number of monthly active users in Aave’s credit markets reached about 155,000 in February, almost double the level six months earlier and a record high.
By the end of 2025, 86% of Aave’s revenue was generated on Ethereum Mainnet, and to date, a large portion of that revenue still comes from where V4 is now proposed to launch.
The Aave Labs team says the new architecture was developed over a year of security assessment, which included some 345 days of cumulative audits, formal verification and a public safety competition, supported by a $1.5 million DAO budget.
The proposal is currently in the Aave Request for Comment stage, where it must approve a Snapshot vote before proceeding to a formal on-chain governance vote, or AIP, which would include the final risk parameters set by Aave’s risk services providers.