AAVE’s troubles predate the Curve hack; here’s how

• Aave DAO has passed a proposal to purchase $2 million CRV tokens.
• The majority of AAVE investors continued to hold at a loss.

In a new proposal, the governing body of the Aave [AAVE] lending protocol has approved the acquisition of $2 million worth of Curve [CRV] tokens.

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This decision was necessary due to the protocol’s exposure to Curve’s hack. As contained in the proposal,

“The acquisition aims to support the DeFi ecosystem and position Aave DAO strategically in the Curve wars, benefiting GHO secondary liquidity.”

Day traders remain unmoved

While this was a significant development that might influence the protocol’s trajectory in the coming months, holders of its AAVE tokens appear unimpressed. 

An assessment of trading activity in the past 24 hours revealed that sentiment remained negative amid declining accumulation pressure. In fact, the decline in interest in governance tokens preceded Curve’s hack.

According to data from IntoTheBlock, AAVE’s network activity has dwindled since the end of June. The count of daily active addresses trading the altcoin has since dropped by 94%. For context, as of 11 August, only 514 addresses completed AAVE transactions. On 23 June, this was 11,280 addresses.

Likewise, daily new addresses have also plummeted. With only 125 new addresses created on 11 August, new demand for AAVE has dropped by 14% during the same period.

Source: IntoTheBlock

As interest in AAVE declined, whale activity also fell. Per IntoTheBlock, the daily count of large transactions that exceed $100,000 has been reduced by 94% since 23 June.  

With a persistent drop in value and token accumulation, many AAVE holders have remained “out of money,” according to IntoTheBlock’s In/Out of the Money metric. 

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

This metric calculates the average price at which investors purchase tokens. It then contrasts it with the asset’s current market value. If this value is higher than the average cost for an address, the address is said to be “in the money,” that is, the account holds at a profit.

Conversely, if the current price is lower than the calculated average cost, the address is categorized as “Out of the Money,” as it holds at a loss. 

At press time, 78.48% of all AAVE holders hold below their average cost prices. 

Source: IntoTheBlock

Amongst day traders, AAVE accumulation slowed. At press time, key momentum indicators remained below their respective neutral lines, suggesting that selling pressure outweighed buying momentum. 

At 21.43%, AAVE’s Aroon indicator showed that the token’s most recent high was reached long ago.

Source: LINK/USD, TradingView