Brothers,
Every day in the crypto market, people say DeFi is failing and that no one is interested in lending anymore.
But you can see from today's news that:
Aave is not waiting for a bull market; it is preparing for 'the next bull market'.
Aave announced:
The liquidation engine will be completely reshaped in the V4 update.
Dynamic liquidation threshold
Automated auctions
Oracles + MEV protection
Partial liquidation
Batch liquidation processing
Don't underestimate this line of text.
This is an upgrade of financial infrastructure that is preparing to accommodate $100 billion in new cycle capital flow.
Today I explained this matter thoroughly, so you can understand why DeFi is going to 'come back to life'.
**First, Aave has already handled 3.3 billion dollars in liquidation, which means one truth:
DeFi has become a 'large financial system' rather than an experiment.**
Brother, you may not realize:
Aave has already liquidated 295,000 times, totaling 3.3 billion dollars in assets.
What scale is this?
✔ Equivalent to the scale of bad debt processing of a medium-sized bank
✔ The processing volume far exceeds traditional financial lending platforms of the same level
✔ The liquidation success rate is almost 100%
✔ No systemic collapse occurred
Brother, this means:
DeFi has already run through a real-world 'risk management system.'
But the problem arises:
Aave's previous liquidation system was too 'old-fashioned'.
Manual
Trigger slowly
Reliant on external liquidators
Easily rushed by MEV
High slippage
Low liquidation efficiency
The birth of V4 is to equip the next bull market with the full-chain capital engine 2.0.
Second, the core upgrade of V4: Aave wants to transform 'liquidation' from human governance to 'automated financial machines'
In the past, DeFi liquidation was a game for 'miners, bots, and arbitrageurs.'
But a real financial system cannot rely on 'rushing ahead' and 'luck.'
What V4 aims to achieve is:
① Dynamic liquidation threshold → No longer 'one-size-fits-all' liquidation
This is a revolutionary upgrade.
Traditional liquidation logic:
Drop to a certain threshold → total blowout
Leads to:
Users are instantly killed
Market volatility is amplified
Liquidators instead earn too much
Asset prices are easily spiked maliciously
But what is the dynamic threshold?
Automatically adjust the liquidation line based on volatility, asset risk, and market depth.
This upgrade will lead to:
Liquidation is more reasonable
Users are safer
System is more resistant to manipulation
This is called:
'On-chain risk pricing automation.'
② Automated auction mechanism → No longer relying on humans to rush
In the past:
Bot rushing ahead
MEV arbitrage
High slippage
Poor performance
V4 will bring liquidation into:
'On-chain auction → automatic transaction → transparent distribution'
This is similar to Ethereum's MEV-Boost, a structural upgrade.
③ MEV protection + oracle integration → Prevent liquidation from being manipulated by spikes
Brother, this is the point you need to pay the most attention to.
Past liquidation risks came from:
Prices are intentionally spiked
Off-chain oracle delay
MEV liquidators rushing ahead
Using extreme volatility to kill users
The protection of V4 means:
Aave aims to become the safest lending platform in the entire DeFi.
This is not a functional upgrade, it is a moat upgrade.
④ Support partial liquidation → No longer 'a total blowout'
This is an extremely user-friendly design:
Lose a little position
Liquidate a little
Retain the vast majority of positions
Reducing malicious chain liquidations
This happened during those extreme market conditions in 2020 and 2022,
Can save a large number of people.
Aave has finally completed this logic.
Three, why is Aave doing this now? Because the 'real explosion point' of DeFi is the credit cycle of the next bull market
Brother, you need to think clearly:
BTC rises → sentiment rises
ETH rises → usage rises
SOL rises → ecosystem rises
But when did DeFi rise?
Not early stage,
This is the later stage of the bull market:
When everyone starts borrowing money + leveraging + arbitraging + collateralizing.
When was the last time Aave exploded?
Spring 2021
The entire market saw a second violent rally
Leverage demand explosion
Aave, Compound, and Maker soared
Now for the next round:
Aave is upgrading the engine in advance.
It's not for today,
It is to withstand 10 times the capital in the next explosion.
Four, the significance of Aave V4 is not just for Aave, it will drive the entire DeFi 'on-chain credit revival'
TOBY is building a yield layer for Solana,
Aave is upgrading the liquidation layer for Ethereum.
The simultaneous occurrence of these two things means:
**Both hearts of DeFi are upgrading:
Yield heart + liquidation heart.**
You need to consider who the 'infrastructure stocks' will be in the next bull market:
ETH (technology + fees)
SOL (performance + yield)
Aave (lending)
UNI (liquidity)
LST protocol (interest rate layer)
These tracks will explode again in 2025–2026.
Five, my conclusion:
Brother, let me put it bluntly:
**Aave is not updating functions,
Is for the next round of trillion-dollar level DeFi funding to expand the 'infrastructure.'**
The significance of the V4 liquidation engine is far greater than the technical upgrade it appears to be.
It represents:
On-chain finance 'security' upgrade
The 'industrialization' upgrade of the lending system
The collateral system's 'institution-level stability'
Liquidation market 'automation + regulation'
DeFi maturity has entered Level 3 stage
This is not a small positive news,
This is the entire crypto industry transitioning from 'experimental DeFi'
The watershed towards 'financial-style DeFi'.
💬
Brothers:
Do you think Aave can return to its old position in the next bull market?
Even surpass the last round?$AAVE
