Aave V4 users on Circle's Arc network can now borrow USDC against euro-denominated collateral without first selling their euros. The capability runs through a dedicated Forex spoke, where the euro stablecoin EURC is accepted as collateral for dollar loans.

How the Forex spoke works

Aave V4 went live on Arc around September 16, 2026, launching with a lineup of assets that includes USDC, EURC, cirBTC, and WETH.

The protocol is built on a hub-and-spoke design. On Arc, the central hub is called the Core Liquidity Hub, and the Forex spoke draws liquidity from it. That architecture lets euro holders tap the same pool of dollars available to every other user on the network.

Risk separation is the key detail. In the Main spoke, EURC carries a 0% collateral factor, meaning euro deposits there confer no borrowing power at all. The Forex spoke is where EURC becomes usable collateral: a user holding euro stablecoins can borrow USDC against them while keeping their euro exposure intact. The pairing is the point — a euro-denominated asset backs a dollar-denominated debt within a single position, with no need to convert the euros first. Because the activity is isolated in its own spoke, any trouble with EURC collateral stays contained, and the Main spoke does not inherit the currency risk.

The numbers so far

Data from Aave Tracker and Aavescan as of October 15, 2026, shows a deep hub alongside a quiet new route.

The Arc Core hub held approximately $294 million in supplied liquidity, of which around $143 million was USDC. Borrowing in the Core hub stood at roughly $110 million.

By comparison, the Forex spoke had about $68,000 supplied and about $32,000 borrowed. The base borrow rate for the euro stablecoin is around 0.44%. The gap between the hub's nine-figure totals and the spoke's five-figure ones underscores how early the euro-dollar route still is.

EURC is capped at 10 million in the Forex spoke, a deliberately conservative limit set because secondary liquidity for the asset is limited. Thin secondary markets can make unwinding positions harder if liquidations ever need to happen, so the smaller ceiling limits potential damage.

Why Arc, and why now

Arc is Circle's own network, and Circle issues both USDC and EURC. That alignment puts Aave's forex market on infrastructure operated by the same issuer behind both assets in the pair. The network also carries an unusual roster of validators: BlackRock, Visa, and Mastercard are among the institutional validators securing Arc.

Aave V4 itself targets stablecoin-native and institutional use cases.

What this means

For Aave, the Forex spoke is as much a test of the V4 design as it is a product launch. The hub-and-spoke model is built to let the protocol add specialized markets without exposing the whole system to each new risk, and the euro-dollar route is that design working end to end: a specialized market ring-fenced in its own spoke while drawing from shared liquidity.

With roughly $294 million sitting in the Core hub and only about $68,000 supplied in the Forex spoke, there is plenty of room to grow.

The 10 million EURC cap is the number to watch. If supply in the Forex spoke starts approaching it, governance will face a decision about whether secondary liquidity has deepened enough to raise the limit. Meanwhile, the base rate of around 0.44% for EURC reflects light demand, and any meaningful jump would suggest real usage is picking up.