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Aave v3 loans surge, hit record high on Ethereum

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Aave V3 loans surge – an event that could be linked to the introduction of sDAI and ETH borrow costs. As a result of the developments, demand for loans increased.

Aave v3 loans surge, hit record high on Ethereum

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  • Stablecoins, including sDAI and GHO, propelled Aave V3’s $100 million loan record.
  • Assets staked on the protocol reduced in the last 24 hours.

A whopping $100 million— that was the value of loans issued on Aave [AAVE] on Monday 28 August. The landmark, a record high, was reported by Lucas Outumoro,  IntoTheBlock’s Head of Research.

Realistic or not, here’s AAVE’s market cap in ETH terms

As a decentralized non-custodial liquidity protocol, Aave allows users to participate as suppliers, lenders, or borrowers. Suppliers on Aave v3 can provide liquidity to the market, and earn interest on the assets provided.

Borrowers, on the other hand, are able to borrow assets like Ethereum [ETH] using overcollateralized means. The recent surge in activity has sparked considerable interest and speculation about the factors behind this sudden growth. 

sDAI and GHO change the game for Aave

According to Outumoro, the remarkable turn of events could be linked to the introduction of sDAI and ETH borrow costs. In turn, it increased demand for the loans.

For context, sDAI allows DAI depositors to earn interest on any protocol while maintaining liquidity. The sDAI idea is similar to the way users earn with Liquid Staking Tokens (LSTs).

Furthermore, Aave’s V3 lending platform’s ability to smash the record for previous loans on the Ethereum network has now placed it in the top spot as the go-to market for ETH borrowed.

According to data from TheBlock, Aave beat other protocols including Compound [COMP], Iron Bank, and dForce to take the top spot. Besides, being the number one lending platform was not just limited to DAI. 

But Aave also topped other projects when it comes to involving other stablecoins like Circle [USDC] and Tether [USDT]. As a result of the increase, Aave also became the largest holder of sDAI. As of this writing, it boasts owning 5.38% of the entire supply.

Aave topping the lending market on the Ethereun network

Source: The Block

Just a day before, the protocol was second in this regard. However, the activation of its decentralized stablecoin GHO ensured that it reached the milestone in little time.

Not the required catalyst for a TVL boost

However, Aave’s remarkable performance in lending failed to positively impact its Total Value Locked (TVL). At press time, Aave’s TVL was $4.52 billion—a 2.81% decrease in the last 24 hours.

How much are 1,10,100 AAVEs worth today?

The TVL is a metric used to measure the total value of assets locked or staked in a protocol. If the TVL increases, then it means the protocol in question has become more trustworthy.

However, a decrease in the TVL implies restriction in uniquely depositing assets into the protocol. Therefore, Aave’s decrease in the TVL means market participants resisted increasing the liquidity of the Aave protocol. 

Aave Total Value Locked (TVL)

Source: DefiLlama


Victor Olanrewaju is a full-time journalist at AMBCrypto. Settled in Lagos, his fascination with blockchain technology and the cryptocurrency market arose out of his love of freedom and everything free. As a Nigerian, Victor understands the impact unfounded financial restrictions have on a population. He sees Bitcoin and cryptos as a way to circumvent these obstacles, as a tool for value creation despite all the setbacks. A graduate in Physics, Victor previously worked as a Senior Marketer at Melange Technologies. Before that, he dealt with crypto-marketers on a regular basis in his capacity as Copywriter at Ventrix Media. At AMBCrypto, Victor’s focus is on assessing the real effectiveness of both on-chain and off-chain developments on a project and its community sentiment.
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