Aave turns into the #1 app for total value locked after multi-chain expansion

Aave (AAVE) turned into the decentralized app with the largest value locked after attention shifted to DeFi. The app added liquidity from a total of 13 chains, after expanding to some of the most active networks. 

Aave turned into the app with the most significant value locked in its lending vaults. The protocol grew through expansion on the most active networks, adding a total of 13 chains. The main store of value still depends on Ethereum. Aave V3 is still the most active version, but the protocol is close to the leading position for all its chains. 

Most notably, Aave V3 launched on Arbitrum and Optimism, which turned into some of its most active markets. Despite the legacy status of Polygon, there have been calls to abandon the chain and use other sources of liquidity. 

The vault structure of Aave allows it to carry $20.42B in total value locked. The lending app is only surpassed by LidoDAO, which depends on staked ETH. However, Aave is a more active manager of a wider portfolio of coins and tokens. The value locked on Aave reflects its balance of loans and collaterals. The app is also practically aggregating from all other DeFi pools while aiming to mitigate risk with overly conservative collaterals.

The bull market from October onward was also immediately reflected in Aave’s monthly earnings. After a weak month in September, Aave posted more than $2.95M in October earnings, and $4.24M in November. In December to date, the app posted $2.85M in earnings. 

Aave grows after accepting a wider list of assets

Due to its intuitive lending vaults, Aave surpassed both Maker and the new Sky Ecosystem, as well as Ethena, EtherFi, and other smaller passive income protocols. The value of Aave lies in accepting a wider selection of assets. From November onward, Aave onboarded a mix of coins and tokens, with a predominance of USDC. 

One of the new additions was USDS, the new Sky Ecosystem token. Aave continues to accept WETH and WBTC and even tested adding Ethena’s USDe as collateral. Aave also accepted KelpDAO’s rsETH, leading to an expansion of the supply. Some of the Aave lending pools are providing additional activity for liquid re-staking tokens. 

As a result of Aave’s growth, the native AAVE token rallied from outside the top 100 of assets to the top 30. AAVE traded at $385.95, still expecting its short-term rally to $400. One of the milestones for AAVE is to repeat its all-time highs above $600, and then continue with price discovery. 

In the past months, Aave reconsidered its GHO mint and burn policy. The token, which rose to a supply above 180M, went through several burns and is back below 156M. Despite this, the rest of the Aave ecosystem is growing, with multiple purpose-built vaults. Aave is one of the main sources of passive income, accepting coins, tokens, and stablecoins from multiple ecosystems. 

Aave also gained exposure after being used to create a vault for Donald Trump’s World Liberty Financial. The fund acquired a total of 6.13M AAVE, valued at $2.32M. 

Aave V4 creates additional buzz

One of the growth drivers for Aave is the talk of V4, a new approach to vaults. Aave is also waiting for the full implementation of its Umbrella upgrades, which will include token buybacks and burns. Overall, searches for ‘Aave’ also increased in December, coinciding with the price rally. 

Aave V4 will introduce liquidity hubs, which will list a wider collection of assets. The DeFi app will also require a single smart account to interact with liquidity and pools on multiple chains. 

Most of the Aave V4 features may take years to build but are still adding to the hype in the short term. Aave V4 will aim to offer multiple lending strategies, either with regular crypto assets or with real-world tokenized assets (RWAs).

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