AAVE Crypto Hits Record Lending Volumes —What’s Driving the Boom?

AAVE crypto hit record heights in 2024, including record net deposits of $33.9 Billion and active loans of $13.6 Billion.

The demand for decentralized finance (DeFi) and the growing trend was evident in the protocol’s increasing supply.

Aave Crypto Hits All-Time Highs in Net Deposits and Active Loans

According to TokenTerminal, the volume of net deposits for AAVE crypto made it emerge as one of the top DeFi providers.

This showed big growth, especially for a DeFi project, solidifying AAVE’s position as the leader in the DeFi space.

This corresponded with an interest in decentralized finance and continuous innovation in the lending and borrowing sector by AAVE.

According to data, AAVE crypto saw a constant uptrend in net deposits and active loans since mid-2023. This happened after it recovered from stagnation, which was caused by the 2022 crypto market downturn. The net deposits topped the from 2021 and early 2022.

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Active loans also revealed an increasing trend. This showed the increasing liquidity of the platform and the rising demand of borrowers.

One of the reasons for this was the rise in use of DeFi as compared to traditional financial systems. As traditional systems were falling behind AAVE aimed to new lending and borrowing products.

Further, Aave’s efficient risk management, as well as its wide range of assets, gained investor trust.

Aave’s Base Deployment Outpaces Other Chains in Active User Growth

There was accelerated active user adoption of AAVE on the base blockchain. According to Token Terminal data, Base now has over 75,000 monthly active users, making Base the most popular blockchain on Aave for users.

It takes in chains like Ethereum, Polygon, and Avalanche that have received stable but relatively less user activity.

The broad user base on Base attracted by its scalability, low transaction costs, and ease of use, which have made it a preferred platform for DeFi users.

Base demonstrated the significant growth of the blockchain and its increasing lure for decentralized finance applications.

The deployment on Base followed trends seen in DeFi more broadly, which have demanded scalability and lower transaction fees to bring on users.

Despite the stable activity of Ethereum, Base has surmounted other chains in user growth, being a crucial component of AAVE ‘s multi-chain strategy.

This surge in active users on Base reflected a key trend in DeFi: More and more users are demanding that the platforms they use be optimized, faster, cheaper, and more efficient in serving them.

Given its ability to be drowned out by audit reports and research teams, AAVE ‘s decision to go on Base appeared to be quite timely, as its efficiency continued to drive the adoption of the new blockchain.

The success of Base has now allowed AAVE crypto to cement its place as the leader in this multi-chain DeFi world and the commitment of AAVE to opening up DeFi in a decentralized manner across often disjointed blockchain environments.

AAVE OI-Weighted Funding Rate Indicates Bullish Sentiment Amid Price Rally

Additionally, the AAVE crypto’s OI-weighted funding rates have been quite optimistic in the past few weeks.

The funding rate indicated the price of keeping long or short positions on perpetual futures, has continued to stay in the green zone.

This meant that traders were willing to pay a premium to hold long positions of AAVE, a bullish outlook, for the price of AAVE.

This trend of positive funding rate directly aligned with the price surge of AAVE, which shot up from roughly $150 to over $300.

Buying pressure quickly breached these bearish signals despite briefly dipping into negative funding rates last month.

With AAVE still ascending in price, the positive funding rate indicated that liquidity providers were paying to have a long position on the protocol while widespread demand in the derivatives market continued to build.

The bullish outlook increasingly strengthened by traders’ willingness to maintain long positions.

Therefore, this trend implied that AAVE could continue to outperform in the short to mid-term as retail and institutional investors increasingly showed interest in AAVE and purchase it for relative advantage in the the DeFi space.