Followin' the past two days, the Trump family project WLFI (World Liberty Fi) has been continuously increasing its holdings of AAVE, with the current holding value of about $1.5 million. Or stimulated by this news, AAVE has surged 20% in the past 24 hours, and is currently trading at 385 USDT as of the time of writing.
Beneath the good performance of the token price, we can see that Aave's TVL and protocol revenue data have all reached new highs. At the same time, Emilo, the engineering VP of Aave developer avara, has released a forward-looking article on Aave V4 version after a 7-month hiatus. In terms of product, data and token price, Aave is ushering in a new round of explosive growth, and Odaily will sort out the details of these aspects in this article.
Fundamentals
Aave Business Overview
Aave was founded in 2017, with its predecessor being ETHLend. Its core business is a lending protocol, which earns revenue by charging interest on user borrowing. Aave V3 has currently been deployed on 11 chains.
In addition to the lending protocol, Aave has also launched its native stablecoin GHO, but its application scope is relatively small, so we will not go into further details here.
Core Protocol Data
According to DeFiLlama data, Aave's TVL, token price, and total protocol revenue have all experienced explosive growth in the past few months.
- The TVL has surpassed the historical high in October 2021, reaching $22 billion;
- The token price reached a low of around 80 USDT this year, broke through the high of 140 USDT in early September, and began to rise gradually, with an explosive growth at the end of November;
- The protocol's daily total revenue has exceeded the second highest point in September 2021, approaching the highest point at the end of October 2021. The weekly revenue has reached a new high, reaching $22.97 million this week, ranking fifth on the Ethereum network, accounting for 40% of Uniswap (the total cross-chain revenue is basically the same as Uniswap).
(Note: The total protocol revenue refers to all the revenue flowing into Aave, which is the "Fee" item in DeFiLlama, while the user revenue is the "Revenue" item, which is about 20% of the total protocol revenue in Aave.)
Recent Developments
Aave's recent moves have mainly focused on business expansion and partnerships, including the deployment of Aave V3 on the Linea network, deposit incentives for PYUSD, and cooperation with Balancer.
- Network Expansion: Three days ago, Aave initiated a proposal vote to deploy Aave V3 on the Linea network. The highlight is that the Aave DAO has promised to reallocate all airdrop reward programs from liquidity mining, GHO secondary liquidity incentives, or the Linea ecosystem to Aave users. As of 10 pm today, the current support rate is 100%.
- Funding Incentives: An additional 4% annualized deposit incentive has been launched for PYUSD, which will last for 6 months, with a target total deposit of 75 million units. If the PYUSD deposit exceeds this target, the incentive will be evenly distributed.
- External Cooperation: Including cooperation with Balancer to bring liquidity into the Aave market, optimizing the returns for liquidity providers; and launching stkGHO on Pendle.
V4 Preview
This morning, Emilo, the engineering VP of Aave developer avara, released a forward-looking article on the Aave V4 version, and Aave has forwarded it, indicating that the V4 version is coming soon.
What are the core changes in V3?
In 2022, Aave launched the V3 version, and the core changes in the lending protocol business include:
- Portal System: Allowing assets to flow seamlessly between Aave V3 markets across different networks, for example, by burning the original A token on Ethereum and then minting it on Polygon;
- Efficient Mode (eMode): Allowing borrowers to achieve the highest borrowing capacity from their collateral (assets are divided into categories, and different borrowing ratios can be obtained based on the type of borrowing token);
- Isolation Mode: Limiting the exposure and risk of new listed assets to the protocol by setting specific debt ceilings.
What does V4 want to do?
According to the Aave community proposal, V4 will build on the successful features of V3 (eMode, Isolation Mode, etc.), improve capital efficiency, and enhance integration with GHO. Its ultimate goal is to create a truly immutable, permissionless financial layer.
Unified Liquidity Layer
V4 will transition from the monolithic, independent market-oriented design of Aave V3 to a more flexible, fully modular design - this design concept is called the "hub-spoke" architecture, which is a further abstraction of the V3 version's portal concept.
The liquidity layer manages the supply and borrowing limits, interest rates, assets, and incentive measures, allowing other modules to extract liquidity from it. Compared to previous versions, the new liquidity layer allows the Aave DAO to add new lending modules and remove old ones in the future without the need to migrate liquidity.
In this architecture, eMode will no longer exist, and operations such as collateralizing LPs and borrowing RWA assets that were not previously supported will be possible.
The isolation mode will also no longer exist, and long-tail assets will exist on the new hubs and spokes.
