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Assessing the state of Aave and Compound after a year of ups and downs

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After a challenging year, Aave and Compound experienced a decrease in deposits and users. However, their highly anticipated V3 releases are showing positive signs.

Assessing the state of Aave and Compound after a year of ups and downs

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  • Aave and Compound experienced a decline in unique users and monthly deposit volume.
  • Aave V3 saw a spike in TVL recently, while Compound experienced a stable uptrend.

Aave [AAVE] and Compound, the dynamic duo of lending and borrowing platforms that helped pioneer the Decentralized Finance (DeFi) movement, weathered a year of ups and downs. Despite facing what some may call a tumultuous time, how have these two powerhouses fared, particularly with the introduction of their highly anticipated V3 releases?


Read Aave (AAVE) Price Prediction 2023-24


Deposits, users fall on Aave and Compound

Based on Kaiko’s data, both Aave and Compound experienced a consistent decrease in the number of unique users since May 2022. However, Compound’s decline was more notable.

The only two months that showed a deviation from this trend were November 2022, which coincided with FTX’s collapse, and March 2023, when USDC’s de-pegging occurred.

In February 2023, user activity hit a particularly low point, with Aave V2 receiving just over 3,500 monthly users and Compound V2 attracting 1,000.

Aave and Compound monthly unique users

Source: Kaiko

The bear market had a noticeable impact on the monthly deposit volume for both platforms. At the start of 2022, Aave saw an average of $8 billion in monthly deposits. However, in 2023, the average dropped by half to around $4 billion.

The only exception to this trend was March when the platform experienced a surge in deposit volume. This was due to the popularity of flash loans, a feature where tokens are deposited and withdrawn in the same block.

These loans accounted for a staggering $10 billion in deposits in just three days.

Aave and Compound’s V3 sees TVL respite

According to DefiLlama’s data, Aave V3 was on an upward trend. Although the platform experienced a dip in October 2022, the Total Value Locked (TVL) resumed its ascent. As of this writing, the TVL stood at $1.3 billion, despite a sharp drop between 20 April and 23 April.

Aave V3 TVL and USD inflow

Source: DefiLlama

In contrast to Aave, Compound experienced a relatively stable uptrend in terms of TVL, with the only significant dip occurring in March. The platform’s TVL surged and stood at over $587 million.

Furthermore, there has been a consistent flow of stablecoins into the system, although outflow currently dominates.

Compound TVL and USD inflow

Source: DefiLlama


– How much are 1,10,100 COMPs worth today


30-day MVRV check

Upon examining the 30-day Market Value to Realized Value (MVRV) of both Aave and Compound, some similarities in valuation emerged. As of this writing, Aave’s MVRV was -5%, while Compound’s MVRV was -6%.

The MVRV suggested that both tokens were currently undervalued and could potentially rise in value. In addition, at press time AAVE was trading at approximately $71, while COMP was exchanging hands at around $40, both at a loss of less than 1%.

AAVE/COMP 30-day MVRV

Source: Santiment

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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