Aave seeks community backing for V4 launch on Circle’s Arc blockchain
Aave Labs proposed the deployment of its next-generation lending protocol V4 on Arc.
The proposal, which was published on May 29 under “Temp Check” on the Aave governance portal, inquires whether Aave could become a core lending protocol on Arc, considering the network’s plan to launch its mainnet during the summer of 2026.
A temp check is the earliest stage in Aave’s governance process.
Circle’s CEO, Jeremy Allaire, has publicly backed this integration.
We are so excited about seeing V4 on Arc
— Jeremy Allaire – jerallaire.arc (@jerallaire)
Two significant next-gen infrastructures for the future of DeFi
What Arc is and why Aave wants to be on it
Arc is Circle’s public layer-1, designed as what the company calls the economic operating system of the internet. It uses USDC for transaction fees and is built specifically for stablecoin liquidity and tokenized real-world assets.
Arc launched its public testnet with participation from BlackRock, Visa, and AWS, alongside DeFi protocols including Aave, Curve, and Maple. The testnet positioning signaled Arc as a potential regulation-compliant home for institutional DeFi.
Arc has since processed over 150 million transactions from 1.5 million wallets, per Circle. The network moved out of testnet earlier this year as part of Circle’s 2026 push to expand stablecoin adoption beyond payments into capital formation and settlement.
For Aave, Arc represents access to the institutional capital Circle is courting. Aave’s Horizon platform, which lets institutions borrow stablecoins against tokenized assets like US Treasuries, crossed $580 million in net deposits by December 2025.
The DAO’s 2026 roadmap targets $1 billion through partnerships with Circle, Ripple, Franklin Templeton, and VanEck. Implementing V4 on Arc integrates Aave’s lending infrastructure directly into Circle’s institutional pipeline.
How V4’s architecture differs from V3
Aave V4 replaces the fragmented liquidity pools of earlier versions with a Hub-and-Spoke model. A central Liquidity Hub on each blockchain aggregates assets, while customizable Spoke markets draw from that shared liquidity with their own risk parameters. The design is built to handle institutional-scale volume.
V4 also adopts the ERC-4626 vault standard, eliminating the rebasing behavior of current aTokens. That simplifies accounting for integrators, auditors, and tax software, which Aave views as a substantial step forward in terms of adoption by institutions.
The Arc proposal is one of several V4 deployment efforts running in parallel. Aave filed a proposal to deploy V4 on Ethereum Mainnet in March. A separate temp check to deploy on Avalanche, with up to $15 million in incentives tied to growth targets, went live two days ago.
Babylon Labs has suggested implementing native Bitcoin collateral in V4 by introducing Spoke markets.
The governance fight running underneath the expansion
The V4 rollout has not been smooth. The “Aave Will Win” framework, which proposed routing 100% of Aave Labs product revenue to the DAO treasury and ratifying V4 as the core technical layer, passed its temp check on March 1 with just 52.58% support.
Aave Chan Initiative founder Marc Zeller challenged the result, alleging the proposal passed only because of roughly 233,000 AAVE votes from addresses he described as linked to Aave Labs, including a 111,000 AAVE delegation from founder Stani Kulechov. Zeller argued that excluding those clusters would have flipped the vote to rejection.
In February, BGD Labs, Aave’s main technical collaborator for the past four years, said it would not continue working after April 1 due to centralization issues and a supposedly “unfair” presentation of V3’s history in order to justify V4.
The Arc deployment enters that contested environment. Whether it clears the same governance gauntlet that the broader V4 rollout faced will determine if Aave reaches Circle’s institutional users on the timeline its roadmap targets.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
AI Sell-off Hits Anthropic IPO, Potential Valuation Expected to Drop to $1.2–1.3 Trillion
The valuation range discussed by potential investors has been lowered from the previous high of $2 trillion to between $1.2 trillion and $1.3 trillion, and some strategists have even suggested going below $1 trillion to ensure safety. In the face of significant market volatility and financial concerns such as quarterly losses, Anthropic is facing tough decisions, including a discounted valuation, reducing the size of the offering, or postponing the listing.
Moderna Q3 revenue up 29% year-on-year, far exceeding expectations, raises full-year revenue growth guidance to 15%-25% | Earnings Report Insight
Moderna's Q3 revenue increased by 29% year-on-year to $1.31 billion, with profits significantly exceeding expectations. The company raised its 2026 revenue growth guidance to 15%-25%. The ramp-up of next-generation COVID-19 and flu vaccines, along with international market expansion, has driven performance improvement. Phase III data for the personalized cancer vaccine has also shown positive progress. The company is simultaneously advancing cost reduction and pipeline R&D, with year-end cash expectations significantly raised.
Eli Lilly (LLY.US) "lowers its stance" and joins forces with former rival Hims (HIMS.US) to compete for the self-pay weight loss drug market
Eli Lilly is collaborating with Hims & Hers Health, leveraging the telehealth company’s large customer base to expand access to its blockbuster weight loss drugs and boost sales of medications, including its new oral weight loss drug Foundayo.
Crypto prices
More
