AAVE V4: A FAIRER LENDING MODEL WITH RISK PREMIUM

Summary from the TLDR Crypto newsletter

Aave V4 overhauls lending by adding a “Risk Premium” that prices borrowing costs based on the quality of a user's collateral, fixing a long-standing issue where risky and safe borrowers paid the same rates in shared liquidity pools. The protocol assigns risk scores to collateral, computes a position-level risk premium using only the collateral actually needed to back the debt, and accrues that extra cost gradually through interest rather than upfront fees. This design makes borrowing fairer, improves capital efficiency in Aave's new unified liquidity architecture, and aligns interest rates more closely with the real risk each position introduces to the system.