Aave

Ethereum

2024

DeFi

Million

Crypto lending protocol Aave restarts its bullishness as the market resets. AAVE, the namesake token of the platform, surged to nearly 20% in the past 24 hours, capturing the momentum of the <a href="https://www.coingecko.com/" target="_blank" rel="noopener nofollow">broader</a> market which is still up by over 5% since yesterday.&nbsp; 
Aave’s recent developments also contributed to this rally. However, the broader crypto-finance market might be in disagreement with the platform’s current performance. 
<h2 id="strong-200-million-in-market-size-unlocked-on-aave-strong">$200 Million In Market Size Unlocked On Aave</h2> 
Lido Finance, a crypto staking platform, recently <a href="https://x.com/LidoFinance/status/1818653480224981485" target="_blank" rel="noopener nofollow">onboarded</a> the platform’s Lido V3 market instance, custom-made for Aave which is tailored to Lido’s staked Ethereum (stETH) and wrapped staked Ethereum (wstETH). This will significantly improve user experience in lending and borrowing stETH and wstETH as it can be fine-tuned to maximize profitability for Aave users.&nbsp; 
<blockquote class="twitter-tweet"> 
 The Lido V3 market on <a href="https://twitter.com/aave?ref_src=twsrc%5Etfw" rel="nofollow">@aave</a> has been live for 48 hours and just surpassed $200m in market size <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f47b.png" alt="👻" class="wp-smiley" style="height: 1em; max-height: 1em;"> 
 Here’s what you need to know <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f447.png" alt="👇" class="wp-smiley" style="height: 1em; max-height: 1em;"> <a href="https://t.co/aNSGxsq2fy" rel="nofollow">pic.twitter.com/aNSGxsq2fy</a> 
 — Lido (@LidoFinance) <a href="https://twitter.com/LidoFinance/status/1818653480224981485?ref_src=twsrc%5Etfw" rel="nofollow">July 31, 2024</a>
</blockquote> 
This helped AAVE recover in price. The platform also <a href="https://defillama.com/protocol/aave" target="_blank" rel="noopener nofollow">experienced</a> a significant bump in the total value locked (TVL) with a near 10% increase since yesterday. However, the broader market seems to be at odds with Aave’s recent bullishness. 
<img loading="lazy" decoding="async" class="aligncenter size-full wp-image-633470" src="https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269" alt="" width="1024" height="269" srcset="https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269?w=1654 1654w, https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269?w=860 860w, https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2024/08/a_6aaa1b.png?resize=1024%2C269?w=1140 1140w" sizes="(max-width: 1000px) 100vw, 1000px" data-recalc-dims="1"> 
The 2nd quarter revealed some cracks within the lending portion of the decentralized finance (DeFi) space. According to CoinGecko’s 2nd Quarter <a href="https://assets.coingecko.com/reports/2024/CoinGecko-2024-Q2-Report.pdf?utm_campaign=report&amp;utm_source=web&amp;utm_medium=display" target="_blank" rel="noopener nofollow">research</a>, over $31.87 billion in TVL is dedicated to lending, marking a significant cut of the pie on DeFi. However, the main functions of DeFi such as staking, lending, and cross-chain bridges saw a huge decrease in TVL, totaling over $8 billion.&nbsp; 
The value that left these sectors returned in the form of restaking in other platforms or to basis trading protocols that saw a whopping 154% increase in TVL in Q2.&nbsp; 
This decrease in lending activity also translated to the assets on the platform. Blockanalitica <a href="https://aave.blockanalitica.com/v2/ethereum/" target="_blank" rel="noopener nofollow">reveals</a> that a majority of the wallets that hold collateral on Aave are either medium or high risk. 
<img loading="lazy" decoding="async" class="aligncenter size-full wp-image-633472" src="https://www.newsbtc.com/wp-content/uploads/2024/08/a_a5b9c1.png?resize=563%2C314" alt="" width="563" height="314" srcset="https://www.newsbtc.com/wp-content/uploads/2024/08/a_a5b9c1.png?resize=563%2C314?w=563 563w, https://www.newsbtc.com/wp-content/uploads/2024/08/a_a5b9c1.png?resize=563%2C314?w=460 460w" sizes="(max-width: 563px) 100vw, 563px" data-recalc-dims="1"> 
If the market drops by 25%, majority of the wallets are in the red which represents liquidation. This shows that lending on DeFi remains to be dangerous, especially with the current market volatility experienced this week.&nbsp; 
<img loading="lazy" decoding="async" class="size-full" src="https://www.tradingview.com/x/AkgftcPF/" width="1835" height="883"> 
<h2 id="a-short-squeeze">A Short Squeeze?</h2> 
AAVE is currently occupying the range between $93 and $102. This position, although a big downgrade from its return from June price levels, is a solid support for a possible breakthrough in the near future. 
However, as it moves independent of the market, this current bullishness might just be a short squeeze or a sudden increase in price before a sharp fall.&nbsp; 
With the current market environment reflecting this volatility, AAVE will have a hard time securing its June price level bringing in the possibility of further downturns.&nbsp; 
Featured image from Zerion, chart from TradingView

Aave Protocol Unfazed By Market Jitters, Surges 21%

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