Collateralized lending protocols on decentralized finance (DeFi) platforms are experiencing significant growth so far in 2024, a sign of user confidence in these financing alternatives. Currently, active loans amount to more than $11 billion, levels not seen since early 2022according to data from Token Terminal. As for the total value locked (TVL) of the top 10 protocols, among which Aave stands out, it is more than $71 billion, 100% more than the low of $31 billion recorded at the end of 2023For JD Salbego, entrepreneur and founder of Etheros Labs, this is a significant rally that “suggests an increase in leverage, a possible bull market indicator.” He also highlights: “DeFi is ‘waking up again’ and the numbers back it up.”
TVL of the top 10 lending platform protocols. Source: Token Terminal. Based on on-chain data from the past 30 days, Salbego highlights that “the DeFi infrastructure is solid and ready.” He further said:
“Enthusiasts are driving this recovery and new innovations are paving the way for mainstream adoption.” JD Salbego, Founder of Etheros Labs.
He also believes that it is time to invest in projects such as AAVE, the native token of the main lending protocol of the same name. “We may be on the verge of a DeFi renaissance, with projects like Aave leading the way. Even though many DeFi tokens are still in bearish territory, the foundations laid during this recovery could pave the way for significant growth,” he adds. Through the protocols, it is possible to lend and borrow bitcoin (BTC) and other cryptocurrencies, without the need for intermediaries such as banks. To obtain a loan, The person must deposit a certain amount of assets as collateralwhich must be greater than the value of the loan to secure the protocol, in case it cannot be returned. Currently, the AAVE token price is $131 and In the last month it reported a monthly increase of more than 40%. Despite the network's rebound, the token's price is far from the $666 all-time high (ATH) it reached on May 18, 2021.
Historical price chart of AAVE. Source: CoinMarketCap. The implementation of the Umbrella security module in late July represented a milestone in Aave’s evolution. It was reported that was promoted to strengthen and optimize the distribution of rewards and, in addition, allowed the platform to adjust its token economy more efficiently. By stopping the issuance of new tokens and buying back AAVE assets on the secondary market, the security module not only helped reduce the circulating supply. In this way, it generated greater demand for the asset. As a result of the modifications, in the last 30 days, The platform generated more than $20 million in commissionsfar outperforming other lending protocols, as seen in the following chart:
Aave generated $20 million in commission fees. Source: Token Terminal.
Investors maintain confidence
In recent days, it became known that Aave founder Stani Kulechov is selling part of his holdings, according to data shared by Lookonchain. In total, he has sold 55,596 AAVE since February 26, the equivalent of more than 7 million dollars today.
While this move might suggest some distrust in the project, many investors remain steadfast and optimistic about the future of the token. On Reddit, one user stated: “Just hold your AAVE. The fundamentals are great! I think Aave could reach $xxxx in a few years. Maybe even $xx.xxx.” (By this he means it could reach 4- or 5-digit figures.)
Clarification: This article is written for informational purposes only and does not constitute investment advice or financial advice. It is the responsibility of every investor to conduct their own research.