Author: Nanzi, Odaily
Over 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. Possibly stimulated by this news, AAVE has surged 20% in the past 24 hours, and is currently trading at 385 USDT.
Underlying 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, Aave developer avara's engineering VP Emilo has published a forward-looking article on Aave V4 for the first time in 7 months. In terms of products, data, and token prices, Aave is ushering in a new round of explosive growth, and Odaily will elaborate on the details in this article.
Fundamentals
Aave Business Overview
Aave was founded in 2017, originally known as ETHLend, with its core business being a lending protocol that 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 is currently limited, so we will not elaborate further 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.
TVL has surpassed the historical high of October 2021, reaching $22 billion;
The token price reached a low of around 80 USDT this year, broke through the March high of 140 USDT in early September, and began a gradual upward trend, with an explosive growth at the end of November;
The protocol's daily total revenue has exceeded the second highest point in September 2021 and is approaching the highest point at the end of October 2021. Weekly revenue has also reached a new high, reaching $22.97 million this week, ranking fifth on the Ethereum network, accounting for 40% of Uniswap (total cross-chain revenue is basically the same as Uniswap).
(Note: Total protocol revenue refers to all revenue flowing into Aave, which is the "Fee" item on defillama, while user revenue is the "Revenue" item, which is about 20% of the total protocol revenue.)
Recent Developments
Aave's recent actions 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: 3 days ago, Aave initiated a proposal vote to deploy Aave V3 on Linea, with the highlight being 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 10pm today, the current support rate is 100%.
Funding Incentives: Launched an additional 4% annualized deposit incentive 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 and optimize the returns for liquidity providers; launching stkGHO on Pendle, etc.
Outlook for V4
This morning, Aave developer avara's engineering VP Emilo published a forward-looking article on Aave V4, and Aave has forwarded it, indicating that the V4 version is about to be released.
What are the core changes in V3?
In 2022, Aave launched the V3 version, with the core changes in the lending protocol business including:
Portal System: Allows assets to flow seamlessly between Aave V3 markets across different networks, for example, you can burn the original A token on Ethereum and then re-mint it on Polygon;
Efficient Mode (eMode): Allows borrowers to achieve the highest borrowing capacity from their collateral (categorized assets, can get different borrowing ratios based on the type of borrowing token);
Isolation Mode: Limits 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.) to 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 a "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.
Under 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.
