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 are separated because LP positions do not all behave the same. A stablecoin LP, a correlated ETH-staked ETH LP, and a volatile governance-token LP need different risk settings, different caps, and sometimes different liquidation routes.
Borrow Flow
From the user side, one spoke handles the full account lifecycle: deposit LP collateral, check borrowing capacity, borrow, repay, and claim fees when allowed. The interface stays consistent even when underlying LP formats differ across DEXs.
Example Flow
Step 1: Deposit LP collateral
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.
Step 2: Capacity is calculated
The spoke reconstructs the position, prices the underlying exposure, applies collateral factors, and shows the resulting borrowing capacity.
Step 3: Borrow assets
The user draws assets from Hub liquidity up to their capacity. Debt and health update in the spoke after the borrow confirms.
Step 4: Add more collateral
Additional approved LP positions can be deposited later. Each position is valued on its own before contributing to aggregate capacity.
Three-Tier Architecture
Borrowers
Users interact with the Borrow Spoke to deposit collateral, borrow, repay, and manage their loan.
Borrow Spoke (Avana)
Values LP positions, enforces health checks, and coordinates liquidation when collateral no longer supports the debt.
Aave v4 Hub
Shared liquidity and accounting layer. Borrow Spokes draw from Hub reserves after spoke-side checks pass.
Data Flow
- Collateral enters the spoke — the LP position is recorded and tracked for valuation and health.
- Borrow draws Hub liquidity — once capacity checks pass, the spoke requests assets from the Hub.
- Debt accrues as debt shares — interest compounds through the configured rate model while the spoke keeps account state in sync.
- Liquidation if required — unhealthy accounts move through the liquidation path to restore solvency.
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
handleLiquidationwhen risk thresholds are breached
Spoke Responsibilities
| Component | Responsibility |
|---|---|
| Borrow Spoke | Tracks LP positions, aggregate collateral value, and debt for each AMM family. Exposes getUserAggregate(user) for frontends and liquidators. |
| LiquidationAdapter | Runs 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.
Capital supply
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.
Credit lines
Each Borrow Spoke has a credit line that limits how much Hub liquidity it can draw, keeping LP underwriting isolated while sharing capital efficiency.
Independent health factors
Collateral in multiple Borrow Spokes is evaluated separately. Surplus in one market does not automatically cover a deficit in another.