Aave has now enabled borrower incentives for USDC in its V4 Core Hub on Ethereum, allowing borrowers to get 2% in USDC rewards back from the total amount lent (borrowing against eligible collateral) this is among the first large incentive programs within Aave V4, which was launched a few months back with a “hub-and-spoke architecture”.
In the Aave system, liquidity is centralized in “the Core Hub”, while the “spoke” parts handle different types of collaterals as well as risk parameters.
Incentives are again available on Ethereum Mainnet. Borrowers will have to supply any of the supported collaterals to be able borrow USDC. Congrats for being among the first to benefit from these rebates!
How does it work?
Per Aave docs, incentives are sent through the incentive controller, a system module that distributes the AAVE tokens or the USDC. These incentives may come directly from the Aave DAO treasury or be sourced as an external partner like Circle that issues the USDC coins.
Because of this, this initiative is an exact duplicate – or perhaps a scaled-up – version of previous Merit efforts on Base and V3 that had borrowed the discounts, and it now aims at the deployment of V4 to the primary Ethereum chain.
Also Read: Aave V4 Hits Powerful USDC Deposit Triumph in 2026 Surge
The Relevance to DeFi Lending
As per DeFiLlama, it is still the top DeFi lending platform, with more than $30 billion in TVL, competing against Compound, Morpho, and Spark. Since stablecoin borrow APRs have been fluctuating, a 2% discount essentially reduces the net borrowing cost and could boost USDC utilization.
Source: aave.com
Usually, higher utilization leads to higher supply APY, which is good for both lenders and a good test of whether protocol revenue is sufficient to cover the incentive expenditure.
Also Read: AVAX Price Eyes $8.41 as Avalanche DeFi TVL Climbs to $488.5 Million
Migration and Monitoring
The V4 rates will vary by the collateral risk, wETH’s borrowing rate being priced lower than that for volatile assets what is going to take place is the incentive will encourage V4 Pro adoption and liquidity to be moved out from V3.
Source: LinkedIn
Also, they will be keeping a close eye on USDC interest rate, utilization as well and the costs that will be incurred by the DAO treasury.
Also Read: ONDO Price Eyes $0.598 as Bullish Momentum Builds Amid DeFi Expansion
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