Decentralized protocol Aave is considering a V4 deployment on the Monad network that would establish a dedicated lending hub for tokenized equities and cash-equivalent assets.
The proposal, submitted to the Aave governance forum on September 28, calls for three separate collateral spokes based on asset risk while allowing USDC and USDT0 liquidity to be shared across them. The proposed Monad Tokenized Equities Hub would initially include tokenized versions of the S&P 500 ETF, Nasdaq-100 ETF, U.S. Treasury bills, Nvidia, semiconductor stocks, Tesla, and an emerging-market ETF, alongside USDC and USDT0.
The proposal remains at the governance discussion stage. If it advances through an ARFC Snapshot and subsequently receives approval through an Aave Improvement Proposal, the deployment would activate one liquidity hub and three spokes.
Aave splits tokenized equities by risk
The proposed structure is designed to keep tokenized assets with different volatility profiles from sharing the same collateral pool.
The Core Assets Spoke would initially contain SPYx, QQQx, and SGOVx. The Growth Assets Spoke would contain TSLAx, EWYx, NVDAx and SMHx. An Emerging Listings Spoke would remain empty initially and serve as a separate pool for assets with limited trading history or higher volatility.
USDC and USDT0 would be the borrowable assets across all three spokes, while the tokenized equities and cash equivalents would serve as collateral.
The proposal uses realized volatility as the initial basis for segmentation. Core assets are defined as those with one-year realized volatility below 25%, Growth assets fall between 25% and 60%, while assets with less than one year of history or volatility above 60% would enter the Emerging Listings category.
The framework would also allow an asset to move between spokes as its market history, size, and volatility change.
Coinbase tokenized stocks set recent Aave precedent
The Monad proposal comes days after Aave launched a separate Equities Hub on Base using Coinbase’s tokenized U.S. stocks as collateral. Announced September 25, the market allows eligible non-U.S. users to supply seven tokenized equities, including AAPLc, AMZNc, GOOGLc, METAc, MSFTc, NVDAc and TSLAc, to borrow USDC. The stocks cannot be borrowed themselves or used as collateral for one another. Aave announcement
The Base market provides a recent example of Aave’s approach to tokenized equity lending, with each asset subject to separate collateral parameters, supply caps and borrowing limits.
Aave is also developing a separate RWA lending market on Avalanche, with Tether’s USAT planned as the initial dollar liquidity asset. The proposed market would allow eligible tokenized financial assets to serve as collateral for stablecoin borrowing, although Aave has not disclosed the initial collateral assets or a launch date.
Weekend gaps drive the risk parameters
The proposed collateral factors account for a risk that differs from ordinary crypto markets: the underlying equities do not trade continuously.
According to the proposal, xStocks cannot be minted or redeemed while the underlying securities markets are closed over the weekend. That leaves roughly 60 hours during which the tokenized asset’s reference price can remain unchanged before the underlying market reopens.
A significant move in the underlying security during that period could therefore appear as a gap between Friday’s close and Monday’s opening price.
TokenLogic, the proposal’s author, said the proposed collateral factors incorporate both annualized volatility and the 99th percentile of historical weekend downside gaps over a five-year period. The parameters are intended to provide a buffer against losses before bad debt develops, including the liquidator’s bonus.
The proposal also points to Aave V4’s ability to adjust collateral factors dynamically. The factors could be lowered while traditional markets are closed, reducing the amount users can borrow against their collateral without automatically liquidating existing positions.
Chainlink feeds proposed for xStocks
The initial deployment would use Chainlink’s 24/5 oracle infrastructure for xStock price feeds.
The proposed setup would combine regular, extended, and overnight market sessions into a continuous weekday price feed, while prices would stop updating over the weekend under the current design.
The proposal says Chainlink Labs is developing a 24/7 pricing solution that could extend pricing through the weekend. No final configuration for such a system has been included in the proposal.
Oracle behavior is particularly relevant to the proposed lending market because collateral values would need to reflect movements in the underlying securities when markets reopen.
Proposed Monad hub covers eight tokenized assets
The initial hub configuration lists the following assets:
| Component | Proposed Assets |
|---|---|
| Liquidity Hub | SPYx, QQQx, SGOVx, NVDAx, SMHx, TSLAx, EWYx, USDC, USDT0 |
| Core Assets Spoke | SPYx, QQQx, SGOVx |
| Growth Assets Spoke | TSLAx, EWYx, NVDAx, SMHx |
| Emerging Listings Spoke | None at launch |
| Borrowable assets | USDC, USDT0 |
The structure separates collateral by risk while retaining common stablecoin liquidity at the hub level.
The proposal describes this as a way to limit the transmission of liquidation risk between assets with materially different volatility characteristics. A decline in a higher-volatility tokenized equity would therefore be isolated from the collateral pool containing lower-volatility assets.
$15 million Monad incentive budget could support V4
Aave’s proposed V4 deployment would also use an existing $15 million incentive allocation from the Monad Foundation. That budget was initially associated with an earlier Aave V3.7 deployment proposal on Monad. Under the new proposal, the allocation would also support the transition to and growth of the V4 market.
The proposal does not specify a final distribution schedule for the incentives. That allocation would be determined as the deployment progresses.
Governance approval still required
The Monad V4 market has not yet been activated. The current proposal calls for community feedback before the asset list and risk parameters are finalized.
The next steps outlined by TokenLogic are to gather feedback, finalize the market configuration, advance the proposal to an ARFC Snapshot and, if approved, submit an AIP for final confirmation and activation.
The proposal therefore represents a potential expansion of Aave’s lending infrastructure into tokenized equities on Monad, rather than an already active market. Its central design is the separation of collateral into risk-based spokes while maintaining access to common stablecoin liquidity.
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