You open a lending app and see two versions of the same protocol side by side, or you find an old token in a wallet and wonder whether it still converts. Decentralized lending protocols ship their software in numbered versions, and each number marks a change in how deposits, loans and risk rules work.
The Aave lending protocol is one of the clearest examples of that pattern. It has shipped four numbered versions of its lending software, and today it runs V3 and V4 markets at the same time (source: Aave, Changelog). That overlap is why the version label in front of you decides which contracts hold your funds and which risk rules apply to them.
What is the history of Aave?
Aave's history is a series of lending designs on Ethereum. ETHLend matched one lender with one borrower, the 2020 relaunch moved every deposit into shared liquidity pools, and the versions that followed changed how those pools set risk limits and, with V4, how one pool of liquidity can serve many markets at once.
| Stage | Lending design | What it changed for you |
|---|---|---|
| ETHLend | Peer-to-peer loan requests | Each loan waited for a lender to accept it |
| Aave V1 | Shared liquidity pools | You supplied or borrowed against a pool directly |
| Aave V2 | Cheaper pool operations | Lower gas costs and new loan features |
| Aave V3 | Per-asset risk controls | Collateral rules and caps set asset by asset |
| Aave V4 | Hub and Spoke | One Liquidity Hub funds several markets |
Each version is a separate set of smart contracts, the programs that hold deposits and enforce loan terms on the blockchain. A new version is deployed beside the old one, so a position you opened on one version stays on that version until you close it yourself. That is why an interface can show two versions at once, and why the date a version launched tells you less about your own funds than the version your wallet actually used.
Aave Labs is the original author of the protocol and still contributes to it (source: Aave Labs, About). The company that writes the software, the contracts that hold the deposits and the token that votes on changes are three separate things, and how Labs, protocol and token differ matters every time a headline puts all three in one sentence.
Reading the history in order also explains the vocabulary you meet in the app today. Pools explain why you can withdraw without waiting for a borrower to repay, caps explain why a deposit can be refused, and hubs explain how one deposit can fund several V4 markets.
ETHLend and peer-to-peer lending in 2017
ETHLend was the lending project Aave grew out of. Stani Kulechov founded it in 2017 to arrange loans directly between individual users, a peer-to-peer design (source: Wikipedia, Aave). In that model a loan exists only when one lender accepts one borrower's terms, which is the limit that the later pool design removed.
The project also issued its own token, LEND, an ERC-20 token on Ethereum whose sale ran from November 25 to November 30, 2017. Its maximum supply sits just under 1.3 billion units (source: Etherscan, EthLend LEND token). That supply figure matters again for the AAVE token, because it is the number the AAVE supply was converted from.
Peer-to-peer matching works well only when many lenders and borrowers want identical terms simultaneously. A borrower asking for 10 ETH for one month needs a lender who wants to lend exactly that amount for exactly that term, at a rate both of them accept. In a young market with few participants, most requests remain unfilled, and the capital available on the other side sits idle alongside them.
Traditional order books solve the same problem with depth, since many resting orders at many prices make a fill likely. A new lending market has very little depth, so a peer-to-peer design spends most of its time looking for counterparties, which is exactly the cost a shared pool avoids.
If you held LEND in those years, its later conversion into AAVE matters more for your wallet today than anything ETHLend did as a lending product.
The 2020 relaunch and Aave V1
The Aave protocol made its debut in 2020, built by the people who had developed ETHLend (source: Aave Labs, About). Its first version went live on Ethereum mainnet on January 8, 2020 with decentralized liquidity pools that let users supply and borrow assets through smart contracts (source: Aave, Changelog).
The new name and the new design arrived together, since in January 2020 the project relaunched under the Aave name with a liquidity pool model (source: Wikipedia, Aave). From that point the word Aave meant a pool protocol, and every later version number describes a change to how those pools work.
A liquidity pool is a smart contract that holds the deposits of many suppliers in one place. You deposit an asset into the pool and earn a variable rate of interest. The pooled funds back loans to borrowers, who must post collateral worth more than what they borrow (source: Wikipedia, Aave). The borrower deals with the contract and its rules, so the loan is available as soon as the collateral is in place.
Pools also supported an entirely new category of loan, the flash loan, which is borrowed and paid back inside one block of the blockchain (source: Wikipedia, Aave). Because the borrowed amount has to come back inside that same block, a flash loan works only when liquidity is already waiting in a pool, so flash loans on Aave are a direct product of the pool design.
For a supplier in 2020, using V1 meant depositing an asset, watching the balance grow as borrowers paid interest, and withdrawing whenever the pool held enough unborrowed liquidity. Those same basic actions still define every later version, which is why V1 is the starting point of Aave's version history and ETHLend sits before it.
The LEND to AAVE migration
The LEND to AAVE migration swapped ETHLend's token for the AAVE governance token at 100 LEND per AAVE, so 1.3 billion LEND could convert into at most 13 million AAVE. The new supply was 16 million, with the remaining 3 million allocated to an Ecosystem Reserve for protocol incentives (source: Aave, Aavenomics README).
Converting took a single contract call, after the holder had first approved the LendToAaveMigrator contract to spend their LEND. The contract then pulled that LEND from the wallet and transferred back the matching amount of AAVE, set by a fixed ratio inside the contract (source: Aave, AAVE token design README).
Suppose you held 40,000 LEND in 2021 and converted all of it. The contract divided 40,000 by 100 and sent 400 AAVE back to the same wallet, so the arithmetic is one division and nothing else. The AAVE you received then carried voting power over the protocol, because the migration was the first step in moving control of Aave from its core team to AAVE holders (source: Aave, Aavenomics README).
The conversion stayed open for more than half a decade. Aave governance closed it with proposal 480, which was created on May 4, 2026 and executed on May 8, 2026. Execution set the deadline for LEND to AAVE migrations and shut the migration contract down (source: Aave Governance, Proposal 480).
A wallet you have not opened since 2020 shows where that deadline bites. If the same 40,000 LEND turns up there now, the migration contract that once paid 400 AAVE for it no longer converts anything, so the token never became part of your AAVE balance. The AAVE token and its supply start from that conversion, which is why the migration belongs in the protocol's history as much as any version launch.
With the conversion route closed, holding AAVE today means buying the token on a market. If that is your next step, BloFin offers AAVE/USDT Spot for owning the token and the AAVEUSDT Perpetual for a USDT-settled contract on its price, and the BloFin fee schedule shows the maker and taker rates for both before you place an order.
Aave V2 and the first networks beyond Ethereum
Aave V2 launched on December 3, 2020, cutting the gas cost of each action and adding collateral switch and batch flash loans. It was also the version that first took Aave beyond Ethereum mainnet, to Polygon on April 14, 2021 and then to the Avalanche C-Chain on October 4, 2021 (source: Aave, Changelog).
Gas is the fee you pay the Ethereum network to run each transaction, so every supply, borrow, repayment and withdrawal costs something on top of interest. A protocol that needs fewer computation steps per action is cheaper to use for smaller positions, which is why a gas reduction counted as a headline feature of a lending upgrade.
Governance changed during the same year, starting with Aave Governance v1 on October 29, 2020, which let the community propose and vote on protocol updates. Governance v2 followed on December 16, 2020 and added the ability to execute approved changes on-chain without relying on a trusted party (source: Aave, Changelog).
That second step matters for anyone reading version history, because from then on each protocol change, including every later version launch, became a vote that AAVE holders passed on-chain through the Aave governance process. A version number therefore records a decision by token holders as well as a release of new code.
The Polygon market mattered beyond its date, because once V2 ran on two networks, the same version number described separate markets with separate assets and separate liquidity, so the phrase Aave V2 stopped meaning a single deployment. Today the protocol runs separate markets on many networks, each with its own asset list, its own interest rates and its own pool of liquidity.
Aave V3 and its risk controls
Aave V3 launched on March 16, 2022 as a new iteration of the protocol, introducing efficiency mode along with three risk measures: isolation mode, supply caps and borrow caps (source: Aave, Changelog). At launch, those controls decided how much you could borrow against each asset, how much of it the protocol accepted and how much debt it could back.
Efficiency Mode, or E-Mode, gives you a higher loan-to-value (LTV) ratio, the share of your collateral's value you can borrow, when the asset you supply and the asset you borrow sit in the same category, such as USD-pegged stablecoins. Until version 3.7 in 2026, Isolation Mode let a new or more volatile asset be listed as collateral that could borrow only a set basket of assets, usually stablecoins, up to a debt ceiling (source: Aave, Aave V3 overview).
Supply and borrow caps are ceilings on the total amount of one asset the protocol will accept or lend out. Once a cap is full, a deposit or a loan in that asset can be refused even when your own position is healthy, a limit that arrived with V3 and that V1 and V2 users never had to plan around.
V3 reached Ethereum mainnet as the Ethereum Core market on January 27, 2023, set up as the most liquid market for a wide range of assets. The GHO stablecoin, Aave's own decentralized stablecoin, launched on July 16, 2023. Governance v3 followed on December 25, 2023 and made it possible to vote on low-cost networks (source: Aave, Changelog).
V3 kept receiving upgrades after V4 arrived, and version 3.7 rolled out in two parts in April and May 2026, with the second part reaching Ethereum Core, Polygon, Arbitrum and Base among other markets. A new V3 market opened on Monad on July 2, 2026 (source: Aave, Changelog).
Version 3.7 also removed Isolation Mode, the launch feature that capped borrowing against riskier collateral, from the V3 markets it upgraded (source: Aave Governance, Upgrade Aave instances to v3.7 Part 2). On those markets, E-Mode categories, an LTV of 0 on selected assets and per-asset supply and borrow caps now hold riskier collateral in check (source: Aave DAO, Aave v3.7: Isolation Mode & Siloed Borrowing Removal).
Aave V4 and the Hub and Spoke design
Aave V4 went live on Ethereum mainnet on March 30, 2026 with a Hub and Spoke design. A Liquidity Hub holds the assets in one place. Each Spoke connected to it sets its own collateral, risk parameters and liquidation rules. One pool of capital can then serve several markets (source: Aave Labs, V4 launch announcement).
Your deposit goes through a Spoke into the Hub, where any Spoke connected to that Hub can lend it out. A borrower on any of those Spokes draws from the same shared Hub. For anyone launching a new market, that means starting with Aave's existing liquidity from the first day instead of attracting deposits from zero (source: Aave Labs, V4 launch announcement).
That is the practical break from V3, where each market such as Ethereum Core runs its own pool and a new market with different collateral rules has to find its own suppliers before anyone can borrow. On V4, governance can open a market with different rules and fund it from liquidity the Hub already holds.
V4 launched with three hubs and eleven spokes on Ethereum. On July 15, 2026 it reached Avalanche, its first deployment on a second network. On September 16, 2026 it launched on Arc, Circle's USDC-native layer 1 network (source: Aave, Changelog). V4 also runs on Base with a market for tokenized stocks (source: Aave Labs, Coinbase Tokenized Stocks Now Live on Aave V4). Every one of the first hubs opened with conservative supply and borrow caps, which the Aave DAO raises as it watches the markets in production (source: Aave Labs, V4 launch announcement).
Risk premiums, credit lines drawn from another hub and a new liquidation engine are among the mechanics that the Aave V4 architecture adds on top of the Hub and Spoke split. Each of them changes how the protocol prices risk or handles liquidations on V4 (source: Aave Labs, V4 launch announcement). The Hub and Spoke split, by contrast, decides where the borrowed liquidity comes from.
How to tell which Aave version holds your funds
The version holding your funds is the one whose interface and market you used when you supplied or borrowed, because each version keeps its own contracts. Check the interface, the market name and the tokens in your wallet, then treat any move between versions as a withdrawal from one and a fresh supply to the other.
- Check the interface. Aave Pro is the dedicated interface for V4. It shows every Hub and Spoke in one account view (source: Aave Labs, V4 launch announcement). Any position you opened through Aave Pro is therefore a V4 position.
- Read the market name carefully. V3 runs markets with names such as Ethereum Core. V4 launched with hubs named Core, Prime and Plus (source: Aave, Changelog). The shared word Core is easy to misread, so confirm the version label beside the name.
- Look at the tokens in your wallet. On V3, supplying mints aTokens such as aUSDC, whose balance grows as borrowers pay interest. Borrowing creates variableDebtTokens such as variableDebtUSDC that track what you owe (source: Aave, Aave V3 overview).
- Check the address on a block explorer. Paste the token address from your wallet into Etherscan and read the contract name, which helps you identify the deployment that issued it.
- Decide whether to move. Moving means repaying any loan, withdrawing from the old market and supplying again on the new version, with gas paid on each step.
Say you supplied 2 ETH to the V3 Ethereum Core market in 2024 and borrowed 2,000 USDC against it. When V4 went live, that loan stayed on V3 with the same Health Factor, the number that measures how safe your loan is. It still becomes eligible for liquidation if that number falls below 1 (source: Aave, Aave V3 overview).
To move it, you would repay the 2,000 USDC, withdraw the 2 ETH, supply it through a V4 Spoke and borrow again, paying gas on all four transactions. A withdrawal also depends on the old market holding enough unborrowed liquidity at that moment, and the Aave V3 versus V4 differences decide whether the new Spoke's collateral rules suit your position at all.
Version launches and the AAVE token
A version launch changes the protocol's contracts. The AAVE token's role around a launch is governance, because the token lets its holders vote on protocol changes (source: Wikipedia, Aave). The launch date itself is software history and carries no built-in signal about where the token's price goes next.
In practice, the exact parameters for every Hub, Spoke and asset on V4 were set out in an activation proposal on the Aave governance forum. Raising caps, adding Spokes and bringing V4 to new networks all go through debate and a vote on that same forum (source: Aave Labs, V4 launch announcement).
Apply a short checklist whenever a version announcement appears in your news feed:
- Name the part that changed: the contracts, an interface or the token.
- Check which version your own positions use before you act on the news.
- Read the proposal behind the change for its caps, assets and dates.
- Treat a token trade as a separate decision, based on what moves the AAVE price and the risk you accept.
A new version can still matter to the token over time, because more markets and more liquidity are the protocol activity that governance oversees. That link runs through usage, fees and votes, and each of those takes longer to show up than the launch announcement does.
Looking to trade AAVE tokens on BloFin? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, then open the AAVE/USDT Spot trading page or the AAVEUSDT Perpetual page.
Frequently asked questions
What does the name Aave mean?
Aave is the Finnish word for ghost, and the project took that name when it moved from ETHLend to a pool-based protocol. The Finnish link runs through its founder, Stani Kulechov, a Finnish lawyer who was born in Estonia (source: Wikipedia, Aave). Kulechov went on to lead Aave Labs, the company that wrote the original protocol, as its chief executive (source: Aave Labs, About). The name has stayed in use across every release since, so V1, V2, V3 and V4 are all versions of the same Aave protocol under that one brand.
What happened to the AAVE left in the LEND migration contract?
About 302,000 AAVE was still sitting in the migration contract when governance shut it down, and the proposal redirected all of it to the Aave DAO's Ecosystem Reserve. At the time, those tokens were worth roughly $100 million, and the plan is to spend them on partnerships and growing the wider ecosystem once a later governance proposal sets the details. Voters backed it with about 650,000 AAVE in favor against 6 AAVE opposed, well above the 320,000 AAVE quorum it needed (source: Aave Governance, Proposal 480).
Is the original Aave V1 code still available?
The Aave V1 code, released as Aave Protocol Version 1.0 for decentralized lending pools, is public in the aave-protocol repository on GitHub. It sits under the AGPL v3 license next to the V1 white paper and audit reports from Trail of Bits and OpenZeppelin. The repository was archived on December 9, 2025 and is now read-only, so you can study the code but no further changes will be merged into it (source: Aave, aave-protocol repository).
What are the Core, Prime and Plus hubs in Aave V4?
The Core Hub holds the most assets and Spokes and acts as the default source of liquidity. The launch also included e-Mode Spokes for borrowing the asset that a price-correlated token tracks. The Prime Hub is aimed at suppliers who want a tighter set of accepted collateral. The Plus Hub serves stablecoin strategies that should grow behind their own caps. Borrowable tokens marked with a core prefix on another hub are credit lines drawn from the Core Hub (source: Aave Labs, V4 launch announcement).
How was Aave V4 checked for security before launch?
Aave V4 went through roughly 345 cumulative days of security review before it went live. Four audit firms and four independent security researchers took part, along with a public contest on Sherlock that ran for six weeks and drew more than 900 verified participants. Trail of Bits, Blackthorn and ChainSecurity each published audit reports, which sit in the V4 code repository, and Certora worked with the engineering team on formal verification from the early design stage (source: Aave Labs, V4 launch announcement).
Is an Aave protocol version the same as a governance version?
Protocol versions and governance versions describe separate parts of Aave. A protocol release changes lending features and risk controls, while a governance release changes how the community proposes, votes on and executes updates. Both have used labels such as V2 and V3, but the matching number does not make them the same release. Read the full announcement title before adding an event to a timeline, because a governance upgrade belongs to a different release history from a lending upgrade (source: Aave, Changelog).
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. Primary sources include the Aave protocol changelog, Aave Labs About, the Aave Labs V4 Ethereum launch announcement, Aave V3 documentation, Aave governance proposals 480 and 489, the Aave v3.7 removal notes on GitHub, the Aavenomics and AAVE token design READMEs on GitHub, the aave-protocol repository, Wikipedia's Aave article and the Etherscan record for the EthLend LEND token. All facts independently verified against cited documentation current as of October 2026.
This article is for informational and educational purposes only. It is not financial, investment, trading, or legal advice. Cryptocurrency can lose value. Borrowing on Aave can lead to liquidation if the health factor drops below 1. Spot AAVE/USDT buys the token. An AAVEUSDT Perpetual is a contract on the price. Do your own research. Consider your circumstances before using any protocol or trading any asset.