aave

1) Executive summary
$AAVE is DeFi's dominant lending project, operating decentralized markets where users supply assets to earn yield and borrowers access overcollateralized loans. The project manages risk parameters directly through governance, offering a battle-tested approach to decentralized lending with over five years of operational history. Since launching in 2020, Aave has iterated toward greater capital efficiency, risk segmentation, and multichain expansion across three major versions, with V4 expected later in 2026.
January marked a strong start to 2026 across Aave's core lending metrics. TVL, active loans, fees, and revenue all grew month over month, with TVL and active loans also posting substantial year-over-year gains. Market share expanded as Aave continued to outpace the broader lending sector's growth. However, monthly active users declined both month over month and year over year, continuing a trend of consolidation following elevated activity in late 2025.
The chain distribution remained concentrated on #Ethereum , which accounted for over 80% of TVL, active loans, fees, and revenue. However, user activity continued to skew toward Aave's multichain deployments.
🔑 Key metrics (January 2026)
Total value locked: $57.33b (+5.18% MoM, +59.71% YoY)Active loans: $23.25b (+7.27% MoM, +58.12% YoY)Fees: $75.13m (+14.95% MoM, -4.81% YoY)Revenue: $9.96m (+14.47% MoM, -34.27% YoY)Monthly active users: 114.60k (-5.83% MoM, -15.80% YoY)Market share: 62.82% (+0.61 pp MoM, +1.73 pp YoY)
👥 Aave team commentary:
"January reinforced Aave's position as foundational infrastructure for onchain lending. Total loans originated since launch approached $1 trillion, ETH deposits on the Ethereum Core market reached an all-time high, and Aave's share of #defi TVL has grown from approximately 8% to 28% over the past two years.
Distribution expanded meaningfully through integrations with Kraken DeFi Earn, Jumper Exchange, and Balance. These partnerships extend Aave's reach into CeFi, custody, and aggregation layers without fragmenting liquidity. Stablecoin adoption continued to drive growth, with PYUSD crossing $400m in deposits and over $15b in stablecoin supply now flowing through the protocol.
The Horizon market for RWA-backed lending reached new milestones, with deposits approaching $600m and borrows crossing $200m. On the engineering side, the Aave V4 security contest concluded with 918 participating researchers, marking progress toward the V4 protocol upgrade expected later in 2026.
Aave's recently published '2025 Year in Review' provides further context: at peak, $AAVE held $75b in deposits, enough to rank among the top 50 U.S. banks by assets held. The protocol also processed over $1.1b in liquidations across 100,000+ events without a single issue, while GHO supply grew to nearly $500m."
2) Total value locked
Total value locked (TVL) measures the total USD value of collateral deposited into Aave and outstanding loans. January TVL averaged $57.33b, up 5.18% from December's $54.51b and up 59.71% from January 2025's $35.90b. Ethereum accounted for 81.77% of deposits, with Plasma (8.19%), Arbitrum One (3.52%), and Base (2.59%) comprising the largest non-Ethereum deployments.

3) Active loans
Active loans measures the total USD value of outstanding borrows across all Aave lending markets. January active loans averaged $23.25b, up 7.27% from December's $21.67b and up 58.12% from January 2025's $14.70b. The chain distribution closely mirrored TVL, with Ethereum at 81.90% and Plasma at 8.75%.

4) Fees
Fees measure the total USD value of fees paid by users across all of Aave's lending markets. This metric aggregates fees from six primary sources: lending interest from V2 and V3 markets, flash loan fees, liquidation fees, GHO borrowing interest, and GHO stability module fees. January fees totaled $75.13m, up 14.95% from December's $65.36m but down 4.81% from January 2025's $78.93m. Trailing twelve-month fees reached $943.71m. Ethereum generated 79.63% of fees, a smaller share than its 81.77% of TVL, with Plasma (9.65%) and Base (3.26%) contributing disproportionately to fee generation relative to their deposit bases.

5) Revenue
Revenue measures the total USD value of fees retained by the Aave DAO. January revenue totaled $9.96m, up 14.47% from December's $8.70m but down 34.27% from January 2025's $15.15m. Trailing twelve-month revenue reached $138.30m. Ethereum accounted for 84.31% of revenue, a higher share than its 79.63% of fees, reflecting stronger revenue retention on mainnet relative to other deployments.

6) Monthly active users
Monthly active users (MAU) measures the number of unique wallet addresses that have interacted with #AAVE over a rolling 30-day period. January MAU totaled 114.60k, down 5.83% from December's 121.70k and down 15.80% from January 2025's 136.10k. Unlike TVL and fees, user activity skewed heavily toward L2s: Base led at 38.16%, followed by Ethereum (20.40%) and Arbitrum One (16.77%). L2 chains collectively accounted for over 56% of monthly active users.

7) Market share
Market share measures $AAVE share of active loans relative to other lending projects, including Morpho, Maple Finance, Fluid, Spark, Kamino, Compound, Euler, and Venus. Aave averaged 62.82% market share in January, up 0.61 pp from December and up 1.73 pp year over year. With $23.25b in active loans out of a $37.00b total market, Aave held more than the combined total of all other tracked competitors.

8) Definitions
Products:
Aave V1: the original version of Aave, launched in January 2020.Aave V2: the second major version, launched in December 2020, introducing features like flash loans and credit delegation.Aave V3: the current major version, launched in March 2022, enabling multichain expansion and improved capital efficiency.Aave V4: the upcoming version, expected in 2026, promising a unified Liquidity Hub with modular risk controls.GHO: a decentralized stablecoin native to Aave, launched in 2023, where borrowers mint GHO using their Aave collateral.Horizon: Aave's market for RWA-backed lending, enabling credit against tokenized real-world assets.
Metrics:
Total value locked: measures the total USD value of collateral deposited into Aave and outstanding loans.Active loans: measures the total USD value of outstanding borrows across all Aave lending markets.Fees: measures the total USD value of fees paid by users across all of Aave's lending markets. This metric aggregates fees from six primary sources: lending interest from V2 and V3 markets, flash loan fees, liquidation protocol fees, GHO borrowing interest, and GHO stability module fees.Revenue: measures the total USD value of fees retained by the Aave DAO.Monthly active users: measures the number of unique wallet addresses that have interacted with Aave over a rolling 30-day period.Market share: measures Aave's share of active loans relative to other lending projects.
This article is my personal research and opinion, so if you have to perform any action do your own research also.
#AAVEUSDT #bullishleo

Aave reported strong January 2026 metrics: $57.33B TVL (+5.18% MoM), $23.25B active loans (+7.27% MoM), and 62.82% market share. However, monthly active users declined to 114.6k (-5.83% MoM), with Ethereum dominating metrics while user activity skews toward L2slikBase.#Aave $BNB

The cryptocurrency market entered the new year under mounting pressure, as leverage across derivatives markets became increasingly stretched. Risk appetite surged aggressively, setting the stage for a series of cascading liquidations that exposed structural fragilities within the broader crypto ecosystem.
By mid-January, a wave of approximately $550 million in long liquidations pushed Bitcoin (BTC) back toward the $86,000 region. The stress intensified on January 29, 2026, when BTC slipped to $84,000 amid nearly $1 billion in forced liquidations.
The situation deteriorated further in early February, as Bitcoin plunged 33% in just 72 hours, collapsing from $90,000 to $60,000. This sharp drawdown triggered widespread margin calls and a chain reaction of forced selling across centralized and decentralized markets alike.
Signs of Leverage Reset Beneath the Surface
Despite the severity of the sell-off, liquidation heatmap data revealed a notable shift in market dynamics. As BTC approached the $64,000 level, short liquidations began to increase, while long liquidations declined materially.
Even the drop below $58,000 resulted in only $670 million in long positions being wiped out, a significantly smaller figure compared to previous volatility cycles. Likewise, the rebound above $70,000 triggered just $2.6 billion in short liquidations, a relatively modest squeeze when measured against liquidation cascades seen between 2021 and 2024.
These figures suggest that much of the excessive leverage had already been flushed from the system. While selling pressure has eased, demand remains cautious and capital deployment is gradual—characteristics typical of a sideways accumulation phase rather than a decisive trend reversal.
From Market Shock to Multi-Chain Deleveraging on Aave
Liquidation activity on Aave (AAVE) has historically surged during periods of macro-driven market shocks and abrupt shifts in risk sentiment.
In May 2021, China’s crypto ban combined with Tesla’s environmental concerns sparked a market-wide sell-off, resulting in approximately $362 million in liquidations across more than 5,500 positions on Aave. A similar pattern emerged in June 2022 following the collapse of LUNA, forcing over 32,000 positions into liquidation, though the total value was lower at around $200 million.
More recently, on October 10, 2025, another sudden market drop erased over $250 million within 24 hours.
The latest episode, spanning January 31 to February 5, proved even more severe. A hawkish stance from the U.S. Federal Reserve, combined with forced selling, pushed total liquidations on Aave beyond $400 million, marking the largest liquidation event of the current cycle.
Despite these shocks, Aave continued to absorb liquidation flows efficiently, avoiding systemic disruption—a testament to the protocol’s risk management design.
Ethereum Dominance, Multi-Chain Expansion
From a structural standpoint, the majority of Aave’s liquidation value remains concentrated on Ethereum (ETH), which hosts the largest share of collateral. Data shows that Ethereum processed approximately $3 billion in liquidations across 58,106 transactions, reinforcing its central role within Aave’s ecosystem.
However, liquidation pressure has increasingly spread beyond Ethereum as leverage unwinds across multiple chains.
Polygon recorded the highest number of liquidation events, with 137,187 transactions totaling $623 million, reflecting the closure of smaller, retail-sized positions on low-fee networks.
Avalanche followed with $196 million,
Arbitrum with $175 million,
Base with $124 million,
while other networks collectively accounted for roughly $41 million.
While Ethereum continues to dominate in terms of value, the growing dispersion of liquidation events across chains highlights deeper and more widespread DeFi participation throughout the ecosystem.
From Forced Liquidations to Protocol Yield
According to data from LlamaRisk, liquidation-driven revenue generation via SVR (Shared Value Revenue) accelerated sharply during periods of heightened market stress.
In the initial phase, approximately $559.8 million in SVR liquidation value flowed through the system, resulting in roughly $13.17 million in recovered value.
Of this total:
Aave captured around $8.56 million,
Chainlink (LINK) earned approximately $4.61 million.
These revenue spikes closely coincided with forced liquidation events during periods of elevated volatility, underscoring the effectiveness of Aave’s newly implemented revenue layer.
More importantly, Aave has demonstrated an ability to convert liquidation activity—traditionally associated with risk—into sustainable, protocol-level yield.
A Structural Shift in DeFi Economics
This mechanism operates across multiple layers.
First, liquidation incentives generate direct margins.
Second, SVR captures MEV value internally, preventing leakage outside the ecosystem.
Finally, accumulated value flows into the protocol treasury, where it can be redeployed into lending operations and incentive programs—creating a closed-loop capital cycle.
As a result, market stress no longer represents pure loss. Instead, it is increasingly restructured into a durable yield engine at the protocol level, signaling a meaningful evolution in DeFi’s economic design.
This article is for informational purposes only and reflects a personal blog-style analysis. It does not constitute investment advice. Readers should conduct their own research before making any financial decisions. The author bears no responsibility for investment outcomes.
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