Aave has officially launched its v4 upgrade on Ethereum, after approximately two years of development. This upgrade introduces a new architecture that separates lending markets while sharing liquidity, aiming to expand DeFi from crypto-native lending to real-world assets and institutional use cases. Version v4 changes how Aave organizes its markets, allowing different types of lending markets to operate independently while sharing the same liquidity pool, enabling users to lend and borrow on assets beyond crypto tokens in the future. Stani Kulechov, founder of Aave Labs, stated that lending is based on trust and requires lending conditions that reflect market conditions. He also noted that the upgrade facilitates development and expansion on top of the protocol by other teams. In terms of capital efficiency, version v4 also allows for the reinvestment of idle funds within the system. The upgrade launches with a limited set of markets and conservative parameter settings; more features will be added gradually after governance resolutions. This launch comes at a time when governance disputes are raging within the Aave ecosystem regarding decentralization and revenue distribution.