A Comprehensive Analysis of Aave's Trends: Trump Family "Support", V4 Launching Soon
TVL and weekly protocol revenue hit an all-time high; V4 will further enhance capital efficiency.
Author: Nan Zhi, Odaily Planet Daily
In the past two days, the Trump family project WLFI (World Liberty Fi) has continuously increased its holdings in AAVE, with the current position valued at approximately $1.5 million. Possibly stimulated by this news, AAVE surged 20% in 24 hours, reporting at 385 USDT at the time of publication.
Beneath the strong performance of the token price, we can see that Aave's TVL and protocol revenue data have reached new highs across the board. Meanwhile, Aave developer avara's engineering VP Emilo has released a preview article for Aave V4 after a 7-month hiatus. In terms of products, data, and token prices, Aave is experiencing a new round of explosive growth, and Odaily will outline the details of these aspects in this article.
Fundamentals
Overview of Aave's Business
Aave started in 2017, originally as ETHLend, with its core business being a lending protocol that earns revenue by taking a commission from the interest on user loans. Currently, Aave V3 has been deployed on 11 chains.
In addition to the lending protocol, Aave has launched its native stablecoin GHO, but its application scope is currently limited and will not be elaborated on here.
Core Protocol Data
According to DefiLlama data, Aave's TVL, token price, and total protocol revenue have all seen explosive growth in recent months.
TVL has surpassed the historical high of October 2021, reaching $22 billion;
The token price hit a yearly low of about 80 USDT, broke through this year's high of 140 USDT in early September, began to rise gradually, and experienced explosive growth at the end of November;
The protocol's daily total revenue exceeded the second-highest point of September 2021, approaching the highest point at the end of October 2021. The weekly revenue has set a historical high, reaching $22.97 million this week, surpassing MakerDAO to rank fifth on the Ethereum network, accounting for 40% of Uniswap's revenue (the total revenue across all chains is roughly consistent with Uniswap).
(Note: Total protocol revenue refers to all income flowing to Aave, listed as "Fee" in DefiLlama, while user income is "Revenue," which is about 20% of the total protocol revenue in Aave.)
Recent Developments
Aave's recent actions mainly focus on promoting its business scope and collaborations, including the deployment of Aave V3 on the Linea network, deposit incentives for PYUSD , and partnerships with Balancer.
Network Expansion: Three days ago, Aave initiated a proposal vote for deploying Aave V3 on Linea, with the highlight being that Aave DAO committed to redistributing all airdrop reward plans from liquidity mining, GHO secondary liquidity incentives, or the Linea ecosystem back to Aave users. The proposal will close today at 10 PM, with current support at 100%.
Funding Incentives: An additional annualized 4% deposit incentive has been launched for PYUSD, which will last for six months, with a target total deposit amount of 75 million units. If the PYUSD deposit exceeds this target, the incentives will be evenly distributed.
External Collaborations: This includes a partnership with Balancer to bring liquidity into the Aave market, optimizing returns for liquidity providers; launching stkGHO on Pendle , etc.
V4 Preview
This morning, Aave developer avara's engineering VP Emilo released a preview article for Aave V4 , and Aave retweeted, indicating that the V4 version is coming soon.
What are the Core Changes in V3?
In 2022, Aave launched version V3, with core changes in the lending protocol business including:
Portal System: Allows assets to flow seamlessly between Aave V3 markets across different networks, for example, burning the original A token on Ethereum and then reminting it on Polygon;
Efficient Mode (eMode): Allows borrowers to achieve maximum borrowing capacity from their collateral (classifies asset categories to obtain different borrowing ratios based on the type of borrowing token);
Isolation Mode: Limits the exposure and risk of newly listed assets to the protocol by setting specific debt limits;
What Does V4 Aim to Achieve?
According to Aave community proposals, V4 will build on the successful features of V3 (eMode, Isolation Mode, etc.), enhancing capital efficiency and integration with GHO. Its ultimate goal is to create a truly immutable, permissionless financial layer.
Unified Liquidity Layer
V4 will shift from Aave V3's monolithic, independent market-oriented design to a more flexible, fully modular design—this design concept is referred to as a "hub-spoke" architecture, which is a further abstraction of the portal concept from V3.
The liquidity layer manages the limits on supply and borrowing, interest rates, assets, and incentives, allowing other modules to draw liquidity from it. Compared to previous versions, the new liquidity layer allows Aave DAO to add new lending modules and remove old ones in the future without migrating liquidity.
In this architecture, eMode will no longer exist, and operations previously unsupported, such as collateralizing LPs and borrowing RWA assets, will be possible.
At the same time, the isolation mode will also cease to exist, and long-tail assets will exist on the new hub and spoke.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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