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Assessing the impact on Aave following Curve founder’s deposits

2min Read

Given the mechanism of the Aave V2, the recent CRV concentration has impacted the protocol’s revenue.

Assessing the impact on Aave following Curve founder's deposits

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  • Aave fees jumped as high as $2.64 million.
  • Curve’s founder Michael Egorov reduced his debt while Aave’s TVL fell.

Decentralized Finance (DeFi) protocol Aave [AAVE] recorded an incredible hike in fees on 3 August, digital asset research platform ASXN revealed. Usually, the Aave protocol makes money in fees when users access large uncollateralized loans which are returned with interest. 


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


According to ASXN, Aave fees on 3 August increased by 412.6% compared with the one generated on 2 August.

Credit to CRV’s input

One reason why Aave has been able to make this much is because of the Curve Finance [CRV] recent troubles and its founder’s resolve to keep the protocol safer than before. To mitigate liquidation risks, Curve’s founder Michael Egorov began borrowing stablecoins on Aave. 

However, in a new series of Over-The-Counter (OTC) transactions, Egorov had sold a total of 110 million CRV. Based on Dune Analytics’ dashboard, the founder has received $22.8 million in Tether [USDT] to repay the debts. 

At press time, Lookonchain reported that Egorove had $220.4 million in collateral and $79 million in debt. 

While the Aave protocol may have gained from Curve, its governance token did not experience the same fate. In fact, it was the other way around. Based on CoinMarketCap’s data, AAVE’s seven-day performance was a 13.33% decrease triggered by the exploits on the Curve pool.

No “GHO” area as TVL and volume shrink

Within the same period, its stablecoin GHO has been oscillating between losing its peg to the dollar and regaining it. Interestingly, this was happening at a time when Aave announced that 10 million GHO had been minted.

In terms of its Total Value Locked (TVL), DefiLlama showed that Aave has fallen below the $5 billion mark. This was a result of the 15.16% decrease in the last 30 days.

The TVL measures the total value of unique deposits into a protocol. When the TVL increases, it means the distributed Application (dApp) has become more trustworthy. But when the metric decreases, it implies that a protocol isn’t perceived to be healthy. 


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


Meanwhile, Aave’s 24-hour volume has been encouraging. According to DefiLlama, the volume was down to $87.29 million— a 29.53% decline in the last 24 hours.

Aave TVL and volume

Source: DefILlama

Typically, a greater volume leads to fair prices. However, AAVE’s volume decrease signifies inefficient trades as the asking price of sellers has failed to meet the potential bid of buyers.

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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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