Skip to main content
Avana logo

Borrow Spoke

The isolated LP-collateral market where users deposit positions, borrow assets, and manage loan health.

Overview

A Borrow Spoke is an isolated LP-collateral market. It decides which pools are supported, how each LP position is valued, what collateral factors apply, which assets can be borrowed, and how liquidation works for that market. Borrow Spokes separate collateral markets whose positions require different risk treatment. Stablecoin LPs, correlated ETH and staked-ETH LPs, and volatile governance-token LPs can have different collateral factors, exposure caps, and liquidation routes.

Borrow Flow

A Borrow Spoke manages the account lifecycle: accepting LP collateral, calculating borrowing capacity, recording borrows and repayments, and permitting eligible fee claims. DEX-specific handling allows this lifecycle to apply across different LP formats.

Example Flow

The user deposits an approved LP position. The liquidity stays in the pool, but the spoke records it as collateral and starts tracking value and health. The spoke reconstructs the position, prices the underlying exposure, applies collateral factors, and shows the resulting borrowing capacity. Once the checks pass, the Borrow Spoke draws the requested asset from Hub liquidity. The confirmed borrow updates debt and account health within that spoke. Additional approved LP positions can be deposited later. Each position is valued on its own before contributing to aggregate capacity.

Three-Tier Architecture

The architecture separates shared lending accounts from LP-specific collateral management. The Hub manages reserves and debt, while each Borrow Spoke determines borrowing capacity and liquidation handling for its supported LP markets. The Lend Spoke routes supplier deposits into the Hub, so supplying capital does not require managing an LP position.

Data Flow

  1. Collateral enters the spoke — the LP position is recorded and tracked for valuation and health.
  2. Borrow draws Hub liquidity — once capacity checks pass, the spoke requests assets from the Hub.
  3. Debt accrues as debt shares — interest compounds through the configured rate model while the spoke keeps account state in sync.
  4. Liquidation if required — accounts below the liquidation threshold enter the configured collateral recovery process.

Hub interaction

  • • Borrow: spoke draws from the Hub when a user opens or extends debt
  • • Repay: spoke restores debt to the Hub when a user repays
  • • Health check: Hub reads spoke collateral data via getCollateralData
  • • Liquidation: Hub can call handleLiquidation when risk thresholds are breached

Spoke Responsibilities

ComponentResponsibility
Borrow SpokeTracks LP positions, aggregate collateral value, and debt for each AMM family. Exposes getUserAggregate(user) for frontends and liquidators.
LiquidationAdapterRuns penalty accrual, soft unwind, and hard liquidation for LP formats that need specialized handling.

Aave v4 Hub Role

The Borrow Spoke does not hold lender reserves. The Hub provides pooled liquidity, reserve accounting, and the balance-sheet side of borrowing while the spoke handles LP-specific risk.

Assets such as USDC, DAI, and ETH enter through the Lend Spoke and Hub. The Borrow Spoke decides how much of that liquidity an LP-backed account may access. Each Borrow Spoke has a credit line that limits how much Hub liquidity it can draw, keeping LP underwriting isolated while sharing capital efficiency. Collateral in multiple Borrow Spokes is evaluated separately. Surplus in one market does not automatically cover a deficit in another.