Reasonably and convincingly tell you why AAVE will rise to $1000.
Written by: Kolten, Aave, Avara
Compiled by: Alex Liu, Foresight News
In the field of decentralized finance (DeFi), distribution capability determines everything, and no one does it better than Aave. With five years of market experience, millions of users, and the deepest liquidity in DeFi, projects built on Aave can achieve scale effects and network effects unmatched elsewhere.
Project teams only need to integrate Aave to immediately gain the infrastructure, user base, and liquidity support that would normally take years to build—this is what is known as the 'Aave Effect.'
Some key data
Data source: DefiLlama
Aave is currently the largest protocol in DeFi, and even the largest protocol in history, accounting for 21% of the total locked value (TVL) in DeFi; 51% of the TVL of all lending protocols; total net deposits exceed $49 billion. (Note: it has now exceeded $50 billion)
Although these numbers are already quite impressive, what matters more is Aave's distribution influence. For example:
The stablecoin sUSDe from Ethena, after focusing on integrating Aave, saw deposits surge from $2 million to $1.1 billion within two months;
Pendle achieved $1 billion in deposits just weeks after its PT token was added to Aave, and this figure has now reached $2 billion, making Aave the largest supply market for Pendle tokens;
The rsETH from KelpDAO saw TVL grow from 65,000 ETH to 255,000 ETH, achieving a fourfold increase in just four months after integrating Aave.
In addition, Aave hosts over 50% of active stablecoin assets, is the largest destination for BTC in DeFi, and is the only protocol with a TVL exceeding $1 billion across four different networks. This distribution capability is unparalleled.
Why is all this happening?
Any protocol can attract deposits through incentives (such as token rewards or liquidity mining), thereby driving the growth of asset supply, so looking solely at TVL is not sufficient to judge the true activity of a protocol. At present, attracting deposits is a widely understood challenge, while stimulating the demand for asset usage is very difficult—unless you are Aave.
Active borrowing volume, data source: Token Terminal
Aave currently has a total active borrowing amount exceeding $18 billion, surpassing the total of all its competitors combined. Aave is not just a simple staking platform; the assets deposited by users on Aave are either lent out or used as collateral to borrow other assets, rather than simply 'lying in a pool.'
This creates a continuous demand mechanism in a positive feedback loop. When an asset is added to Aave, or when a project is built based on it, it can immediately benefit from this real market demand. All ecosystem participants benefit from the actual economic activity generated by an active user base.
This is particularly critical for development teams looking to build products based on Aave. Aave has withstood multiple market cycles, continuously gaining the trust of developers and users for five years, while managing billions of dollars in assets long before many current popular protocols.
More importantly, developers building on Aave are not limited by 'capacity.' In contrast, Aave can handle significantly higher supply and borrowing volumes than its competitors, making it highly feasible for any scale of fintech application (whether retail, institutional, or both).
Future Outlook
With the upcoming launch of Aave V4, this 'effect engine' will continue to expand. The new architecture will bring richer asset support and new lending strategies for developers and users.
All the elements that constitute Aave's core value—its distribution capability, trust base, active usage rate, etc.—will be further strengthened in V4. If interested, it's recommended to read the article (Understanding Aave V4’s Architecture) for a deeper understanding of the upcoming updates.
