The cryptocurrency lending landscape is experiencing notable maturation, particularly as stablecoin borrowing rates have stabilized in the range of 6-8%. At the forefront of this evolution is Aave, which has solidified its status as a leader in decentralized finance (DeFi) lending after navigating the tumultuous events of 2022.
According to Marc Zeller, founder of the Aave Chain Initiative, the Aave Decentralized Autonomous Organization (DAO) is operating on solid footing. Established in 2023 in the wake of devastating downturns caused by the Terra (LUNA) debacle and the collapse of FTX, the Aave DAO represents the interests of the Aave community. Zeller noted that Aave has significantly restructured and revitalized its offerings since these crises. Reflecting on previous uncertainty within the community, Zeller mentioned that there was a phase when the consensus leaned towards winding down Aave, fueled by the belief that the DeFi sector was effectively dead. However, through ongoing enhancements to its codebase, Aave has re-emerged as a critical player in lending activities during the current market resurgence.
Zeller emphasized that Aave’s preeminence is now firmly established across several metrics, including total value locked, revenue generation, market share, and borrowing volumes. The DAO has played a vital role in determining the lending conditions and vault availability, contributing significantly to its success during the latest Ethereum bull market.
The current numbers reflect Aave’s stability, showcasing a record $41.55 billion in value locked and generating approximately $161 million in annualized revenue, more than $47 million of which is allocated for holder incentives. The AAVE token is currently valued at around $299.48, remaining close to its high range. Though it hasn’t yet seen a return to previous peaks of over $698, the token has demonstrated resilience, particularly throughout the ongoing 2024-2025 market upswing.
Aave’s lending operations have reached unprecedented heights, with its native GHO tokens seeing their supply swell to over 352 million. This stablecoin is minted and destroyed dynamically based on Aave’s capability to sustain it. In contrast to other DeFi projects, Aave exercises stringent limitations on the types of assets accepted as collateral, alongside meticulous management of costs and incentives to secure predictable revenue streams and maintain liquidity.
The sector has undergone substantial lessons from prior liquidation cascading events, leading to a more mature state of operations. Currently, DeFi lending rates for Aave are averaging around 6-8% following earlier hikes that exceeded 16%, with reports indicating an 8.13% yield as of September.
Aave has also made strategic expansions onto selected Layer 2 (L2) chains. Zeller highlighted a trend of L2 fatigue during the 2023-2024 bear market, where an oversaturation of chains emerged. Aave has launched on over 26 chains and has rapidly become a leading DeFi protocol. However, Zeller underscored that not all L2 implementations are sustainable. Presently, approximately 86.6% of Aave’s revenues stem from its Ethereum mainnet operations, negating the necessity for bridging or additional transaction costs, and the organization has deemed many L2 deployments as non-viable.
In a recent strategic move, Aave expanded its services to Linea, a decision made in the context of the network’s successful token distribution. This deployment has already attracted $2 billion in deposits, further signaling Linea’s reliability and potential in the DeFi space. Recent reports indicate that Linea has also achieved record values locked, underscoring Aave’s growing influence in this evolving market landscape.
