Aave is a decentralized finance (DeFi) protocol based on Ethereum, focusing on lending services, allowing users to earn interest by depositing assets into liquidity pools or borrowing against collateralized crypto assets. Its core features include:
- Flash Loans: Borrowing without collateral is possible, but must be repaid within the same transaction, suitable for arbitrage, debt restructuring, etc., representing a hallmark innovation of Aave.
- Multi-chain support: Aave has expanded to multiple blockchains including Ethereum, Polygon, Avalanche, and Optimism, improving cross-chain accessibility and user coverage.
- Governance token: AAVE tokens are used for protocol governance, allowing holders to vote on protocol upgrades, asset backing, etc.; in addition, AAVE can be staked for rewards or to reduce platform fees.
- Decentralization and non-custodial: Users interact directly through smart contracts without intermediaries, enhancing transparency and security.
Fundamental highlights:
- Aave is one of the leading protocols in the DeFi space, as of April 2025, with a total value locked (TVL) of approximately $1.76 billion, dominating the lending protocol space (about 67% market share).
- In Q1 2025, Aave generated $183 million in fee income, demonstrating strong profitability.
- The recent launch of the GHO stablecoin and a weekly $1 million token buyback plan aim to enhance the sustainability and value-capturing ability of the token economic model.
Token economics and market data
- Current price: $135 (based on user-provided data, slightly deviating from recent market prices of $138-$148, potentially influenced by short-term fluctuations).
- Market capitalization: Approximately $2.1 billion, ranked 39th in the crypto market, indicating its competitive position in the DeFi sector.
- Circulating supply: Approximately 15.1 million AAVE, with a total supply cap of 16 million and a low inflation rate, nearing the end of token release.
- Fully diluted valuation (FDV): Approximately $2.3 billion, with an FDV/market cap ratio of 1.1, indicating lower dilution pressure in the future.
- Trading volume: Approximately $199 million - $237 million in trading volume over the past 24 hours, accounting for about 10% of market capitalization, indicating ample liquidity.
Historical prices:
- All-time high price: $667.12 (May 18, 2021).
- Historical low price: $3.50 (November 2, 2023).
- The current price is down about 80% from its historical peak but up about 3750% from its lowest point, indicating long-term growth potential.
- Buyback plan: In April 2025, the Aave community approved the first phase of a $4 million AAVE buyback proposal, planning to repurchase $1 million weekly for the next 6 months, aiming to reduce circulating supply and support the price.
Token economics:
- The deflationary mechanism of AAVE (through protocol fees that burn tokens) combined with the buyback plan may provide long-term price support.
- Governance and staking features enhance the intrinsic value of the token, though its price is still subject to overall market volatility in the crypto space.
- The low circulating ratio (94% in circulation) reduces the risk of future selling pressure.
Fundamental advantages
- Market position: Aave holds a 24.5% share of cross-chain TVL in the DeFi lending sector and a 67% share of the lending market, outpacing competitors like Compound and Maker.
- Revenue capability: Generated $1.73 million in revenue within just 48 hours, showing considerable annual revenue potential and indicating a healthy business model for the protocol.
- Innovation capability:
- The GHO stablecoin aims for deep integration with the protocol, enhancing liquidity and reducing reliance on external stablecoins (like USDT, USDC).
- The collaboration proposal with World Liberty Financial (Trump family's crypto project) has increased its exposure in the traditional finance sector.
- Development activity: The Aave protocol continues to upgrade (from V2 to V3) and implements community-driven innovations through Aave Improvement Proposals (AIPs).
- Ecosystem expansion: By supporting multi-chain and real-world asset (RWA) lending, Aave is in a leading position in the integration of DeFi and traditional finance.
Aave's fundamentals are robust, with its leading position in the DeFi lending market, continuous innovation, and a healthy revenue model, indicating long-term growth potential. The current price of $135 is relatively low, coupled with the buyback plan and the GHO stablecoin initiative, suggesting a high likelihood of short-term rebounds and mid-term price increases.