The Evolution of Decentralized Lending: From ETHLend to Aave V4

Aave, as a leader in the DeFi lending space, has a development history that reflects the evolution of the entire industry. From the initial ETHLend project to the current Aave V4 version, Aave continues to innovate and push the boundaries of Decentralization lending.

The Development History of Aave

In May 2017, Stani Kulechov founded the ETHLend project. Initially faced with liquidity challenges, it transformed into a P2C model at the end of 2018, introducing a liquidity funding pool and rebranding as Aave. Aave officially launched in 2020.

In November 2023, Aave Companies was renamed to Avara, expanding its business into multiple fields such as the stablecoin GHO and the social network Lens. Currently, the Aave V3 version has been launched on 12 blockchains, and the upgrade proposal for version V4 has also been announced.

According to the latest data, Aave ranks third in the DeFi sector with a total locked value of ( TVL ), reaching 10.694 billion USD.

Aave's Core Business Model

Aave's main business includes:

1. Lending Business: Achieve P2C lending through a dynamic interest rate model and a liquidity fund pool.

2. Flash Loans: Utilize the atomicity of blockchain transactions to conduct large loans without collateral.

3. Cross-chain lending: The V3 version introduces the Portal function, and V4 further optimizes cross-chain liquidity.

4. Stablecoin GHO: Aave's native stablecoin, deeply integrated with lending services.

5. Social Protocol Lens: A decentralized social network underlying protocol based on NFT.

Aave's Technological Innovations

Aave has made technological innovations in several aspects:

1. Dynamic interest rate model: Automatically adjusts lending rates based on the utilization rate of the fund pool.

2. Flash Loan: Unsecured large-scale borrowing, providing convenience for arbitrage, liquidation, and more.

3. Credit delegation: Allows depositors to delegate unused credit limits to other users for borrowing.

4. Efficient Mode ( E-Mode ): Improve the lending efficiency of similar assets.

5. Isolation Mode: Limit the lending scale of newly listed assets to control risk.

6. Cross-chain Portal: Achieve asset flow between multiple chains.

Aave's Competitive Advantages

1. Multi-chain deployment: Already launched on 12 blockchains, far exceeding competitors.

2. Market Share: Leading in multiple indicators such as lending TVL and trading volume.

3. Product Matrix: Covers multiple fields such as lending, stablecoins, and social networks.

4. Technological Innovation: Continuously launch new features to maintain industry leadership.

5. Brand Effect: As a blue-chip DeFi project, user trust is high.

Challenges Faced by Aave

1. Cross-chain lending competition: Projects like Radiant have already taken the lead in this field.

2. Innovation Pressure: Need to cope with the challenges of various emerging lending solutions.

3. GHO Development: The integration with Aave's main business needs to be improved.

4. Emerging Business Expansion: Non-lending businesses such as Lens have not yet scaled.

The Future Development Direction of Aave

1. Optimize V4 version: Enhance cross-chain lending capabilities and improve liquidity efficiency.

2. Deepen GHO integration: closely combine GHO with lending services.

3. Build Aave Network: Create an ecosystem centered around Aave.

4. Expand non-lending business: Strengthen the development of emerging businesses such as Lens.

5. Maintain technological innovation: Continuously launch new features to consolidate industry position.

Aave, as a leader in the DeFi lending space, has a development trajectory that represents the evolution direction of the industry. In the future, Aave will continue to focus on technological innovation, business expansion, and ecosystem construction, leading the development of Decentralization finance.