Aave, the leading decentralized lending protocol, has achieved a remarkable milestone, reaching $30.5 billion in active loans as of September 18. This figure accounts for 65% of the total $46.72 billion in active loans across various decentralized finance (DeFi) protocols. Data from Token Terminal underscores Aave’s dominant position in the market, showcasing a substantial lead over its closest competitor, Morpho, which manages less than $5 billion in active loans.
In addition to its impressive loan figures, Aave also commands a total value locked (TVL) of $42 billion. This status positions it as the largest DeFi protocol by TVL, according to data from DefiLlama. For perspective, if Aave were to operate within traditional banking frameworks, its deposit figures would rank it as the 53rd largest commercial bank in the United States, placing it among the top 2.5% of US commercial banks based on regulatory data from June 30.
The protocol has been thriving, generating $24.6 million in fees over the past week, making it the fifth-largest crypto protocol when including centralized stablecoin issuers such as Tether and Circle. Among purely decentralized protocols, Aave ranks third in terms of weekly fee generation, only trailing behind Pump.fun and Uniswap.
Aave attracts users for a myriad of purposes beyond just basic lending. It serves as a vital liquidity source for traders looking to leverage their holdings, enabling them to borrow additional capital based on their existing assets. This allows traders to enhance their positions fully on-chain. Additionally, many users aim to earn yield on their idle assets, often seeking returns that surpass traditional finance offerings.
The yield advantages offered by Aave are particularly appealing, drawing significant capital to the protocol. For instance, deposits made in USDC on the Base network yield an attractive 5.76% annual percentage yield (APY) through Aave, a stark contrast to the mere 0.39% average yield provided by FDIC-insured banks. Similar yield premiums are available across different networks and stablecoins; Ethereum USDC offers 5.12%, while Avalanche USDC provides 5.03% returns. Meanwhile, USDT on Ethereum generates a 5.09% yield through Aave, significantly exceeding traditional banking averages, while alternative networks like Linea deliver 3.94% on USDT deposits.
These high rates consistently outperform conventional banking products while being readily accessible on-chain. The growth of active loans on Aave underscores a trend among crypto investors who increasingly prefer decentralized protocols for leverage and yield, solidifying Aave’s significant participation in this evolving sector.
