Why hub and spoke
LP collateral cannot be supported with a generic lending design. It needs a system that handles active liquidity positions, changing collateral composition, market specific valuation, and liquidation paths that differ from standard token collateral. Avana is built on Aave v4's hub and spoke model because LP backed borrowing needs shared liquidity and isolated market logic at the same time.
What the hub and spokes do
The hub holds borrowable assets and coordinates shared liquidity across markets: reserve management, utilization tracking, and credit allocation. A hub is how Avana connects LP collateral to a broader lending framework without forcing every collateral type to share the same assumptions. A stable LP market, a concentrated liquidity market, and a volatile AMM pair should not all be governed the same way just because they draw from the same liquidity pool.
Spokes are where LP specific logic lives: collateral registration, valuation, risk adjustment, monitoring, and liquidation. Each spoke defines how different pool types are treated. A Uniswap concentrated position behaves differently from a fungible Curve LP, which behaves differently from a Balancer weighted pool. The spoke is where LP collateral becomes a real lending market with its own rules inside Avana.
Valuation, oracles, and liquidation
Valuation uses a layered approach. First, what does the LP position actually contain at the current market state. Second, price those underlyings from reliable oracle inputs. Third, adjust through collateral logic that reflects actual pool risk rather than notional size. Not every dollar inside an LP position translates into the same borrowing power on Avana.
Oracle design sits close to the core. For LP collateral, the protocol cannot rely on a single number or a simplistic asset feed. Avana uses a dual source philosophy where external price feeds and AMM derived pricing work together for more reliable valuation. The goal is reducing the chance that temporary dislocations, stale updates, or local pool distortions create unsafe collateral assumptions.
For liquidation, Avana must unwind active LP positions in a controlled way, convert the resulting assets, and settle debt without avoidable loss. The spoke specializes liquidation for the underlying market structure. The hub provides liquidity. The spoke defines collateral logic. Each layer does what it is suited for: clean separation, strong isolation, and a realistic path to scaling LP collateral pool by pool.