Borrow Spoke
Responsibilities and scope of the borrower-facing Avana spoke within the Aave v4 architecture.
Overview
The Borrow Spoke is the execution layer that lets LP holders use active liquidity positions as collateral. It is responsible for receiving LP positions, interpreting position metadata, applying oracle-aware valuation logic, enforcing health checks, and coordinating borrows against Hub liquidity.
This page focuses on the borrower-facing side of the architecture. The separate Invest Spoke handles capital supply, while the Borrow Spoke handles LP-specific underwriting, monitoring, and liquidation behavior for each supported liquidity design.
Why it matters: LP collateral is structurally different from static assets, so the Borrow Spoke exists to translate pool composition, price range, fees, and market state into enforceable credit rules.
User Experience
Borrowers interact with the Borrow Spoke to supply LP collateral, borrow assets, manage open debt, repay balances, and claim earned fees. The spoke is designed to expose these flows through a single borrower-facing interface even when the underlying collateral types behave very differently across AMMs.
Transaction transparency: every action is paired with health factor updates, borrow-cap impact, and collateral-state context so borrowers can understand how a position change affects their loan in real time.
Example Flow: Alice the LP Master
A practical borrower-side onboarding flow:
Step 1: Initial Deposit
Alice has 5 Uniswap v3 LP positions. She deposits her first LP as collateral: 10,000 USDC and 5 ETH in the ETH/USDC pool (ETH price = $2,000), currently worth approximately $20,000 in total value.
Step 2: Borrowing Power Calculated
The Borrow Spoke displays her ETH/USDC position and calculates that, with a 70% collateral factor, she can borrow up to $14,000. This is based on the lower-token collateral factor plus pool-specific risk adjustments.
Step 3: Borrow Multiple Assets
Alice borrows $6,000 USDT, $500 WBTC, $2,000 LINK, $500 UNI, and $1,000 AVAX. Her total borrow is $10,000. She still has unused borrowing capacity, but her health factor is now in the yellow zone.
Step 4: Add More Collateral
Alice deposits 4 more LP positions worth $50,000 combined. After the Borrow Spoke values each position, her aggregate borrowing capacity expands and her health returns to a safer range without changing the underlying Hub capital source.
Three-Tier Architecture
The borrower-side architecture follows a clear three-tier flow:
Top: Borrowers
Borrowers interact with the Borrow Spoke contract to deposit LP collateral, borrow funds, repay debt, and claim fees.
Middle: Borrow Spoke (Avana)
This is the intelligent layer that understands AMM-specific liquidity formats. It manages LP custody, calculates position-specific risk, enforces loan-level health checks, and coordinates liquidation behavior when collateral deteriorates.
Bottom: Aave v4 Hubs & Routed Capital
The Hubs provide borrowable liquidity and macro-level capital controls, while Invest-Spoke-routed capital and other Hub liquidity sources fund draws initiated by the Borrow Spoke.
Data Flow
The borrower-side data flow is unidirectional and operationally well-defined:
- LP Position Manager transfers collateral into the Borrow Spoke - The spoke caches position data and begins health tracking.
- Borrowers draw assets through the Borrow Spoke - The spoke requests liquidity from one or more configured Hubs.
- Debt is represented as debt shares - The exchange rate compounds using the configured interest rate model while the spoke tracks borrower-specific state.
- Liquidations occur when required - Hubs, Avana liquidation nodes, or external liquidators can cause the Borrow Spoke to extract LP liquidity and settle debt through the appropriate liquidation path.
Hub Interaction
- • Borrow: Borrow Spoke issues a draw call to the Hub
- • Repay: Borrow Spoke issues a restore call to the Hub to return funds
- • Health Check: Hub calls Borrow Spoke's
getCollateralDatato fetch total LP collateral value - • Liquidation: If aggregate spoke risk breaches threshold, the Hub can call
handleLiquidation
Spoke Responsibilities
| Component | Responsibility |
|---|---|
| Borrow Spoke (per AMM) | Tracks positions plus per-user aggregated collateral USD and debt USD, and exposes getUserAggregate(user) for the frontend and liquidation adapters. |
| LiquidationAdapter | Executes penalty accrual, soft unwind, and hard liquidation for the Borrow Spoke without collapsing all LP formats into a single liquidation path. |
LiquidationAdapter Functions
applyPenalty(user)- Compute and record accrued penaltysoftUnwind(user, maxUsd)- Execute partial decrease, collect, swap, and repayliquidate(user)- Execute hard liquidation if needed
Events: PenaltyAccrued, SoftUnwindExecuted, HardLiquidationExecuted
Aave v4 Hub Role
The Borrow Spoke does not warehouse lender capital itself. Instead, it relies on the Hub as the capital backbone of the system, drawing from pooled liquidity that can be supplied by Invest Spoke depositors and other configured Hub sources.
Capital Supply
Assets such as USDC, DAI, and ETH are supplied into Hub-connected capital layers, including the Invest Spoke. The Hub sets macro-level pricing and accounting, while the Borrow Spoke decides how much a borrower can safely draw against LP collateral.
Credit Lines
The Hub grants each Borrow Spoke a credit line defining how much borrowing capacity that spoke can access. This keeps LP-specific underwriting isolated while still preserving shared capital efficiency across the system.
Independent Health Factors
A user with LP collateral in multiple Borrow Spokes will have independent health factor calculations per spoke. A deficit in one spoke cannot be offset by collateral in another, which keeps market-specific risk contained.