- Aave founder outlines a plan to connect the multi-trillion-dollar securities market with blockchain technology V4:

Stani Kulechov, founder of the Aave (AAVE) lending protocol, revealed a proposal to move the multi-trillion-dollar securities market to blockchain technology infrastructure, according to a blog post on Friday.

He argued that the protocol’s V4 architecture could support tokenized securities-backed lending, repurchase markets, and securities lending through a shared liquidity model .

Kulechov said that securities financing remains one of the “largest markets that almost nobody thinks about outside Wall Street, and it has already started to move onto the blockchain.”

- Aave seeks to integrate securities financing into blockchain infrastructure:
He pointed out that the average daily trading volume in the U.S. repurchase market is $12.6 trillion, while margin lending is about $1.3 trillion. Kulechov also said that securities lending currently represents approximately $4.6 trillion in assets, while securities-backed wealth management loans exceed $400 billion.

A large part of today’s securities financing infrastructure relies on multiple intermediaries, including custodians, lending agents, prime brokers, and clearinghouses, resulting in higher costs, settlement delays, and limited transparency. Kulechov argued that blockchain-based infrastructure could streamline these processes by making collateral management and settlement more efficient.

Kulechov said that “the best way to move it onto the blockchain is to get the market structure right.”

The proposal is built on Aave V4’s centralized hub-and-spoke architecture, where a central liquidity hub provides capital for multiple specialized markets with independent risk standards.

Kulechov indicated that the design could support a wide range of securities financing activities, including borrowing stablecoins against tokenized securities, conducting on-chain repurchase transactions, and lending tokenized securities to earn yield.

He proposed two possible market structures. One relies on a single liquidity hub serving all markets, which increases capital efficiency but concentrates risk.

Option A — A single shared liquidity hub. Source: Stani Kulechov

The other option is to separate liquidity into multiple hubs based on asset categories and risk levels. This allows treasury-backed assets, credit products, and equities to operate in separate pools while maintaining connectivity through shared market infrastructure.

Kulechov wrote: “The practical path is a spectrum rather than binary. Start unified for depth and simplicity, then move to category- and risk-based hubs as collateral types expand and segregation becomes worth it.”

Option B — Multiple hubs by asset class and risk level. Source: Stani Kulechov

In addition to the technical design, Kulechov argued that blockchain-based infrastructure can reduce the role of traditional intermediaries, shifting functions such as collateral management, settlement, and risk controls to protocol mechanisms. He explained that licensed markets can continue to apply regulatory requirements, such as customer identity verification, while benefiting from shared liquidity.

Kulechov added: “The licensed branch or jurisdictional hub enforces the KYC, jurisdiction, and eligible assets rules at the edge while continuing to rely on shared liquidity, so the regulated entity has a place that fits its rules without fragmenting the order book that the rest of the market depends on.”

Regarding settlement, Kulechov noted that traditional securities markets still rely on settlement times of T+1 and T+2. On the other hand, the Aave V4 platform is designed to support atomic, continuous, and near-instantaneous on-chain settlement.

AAVE shares are trading at $73.2, up 0.2% over the past 24 hours and 13% over the past week at the time of publication.
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