Aave founder Stani Kulechov has predicted that the decentralized lending protocol could hit $100 billion in net deposits by the end of 2025. Kulechov shared the prediction on X, likely in reaction to the protocol’s recent growth.
The DeFi protocol recently surpassed $60 billion in net deposits across all blockchain networks, moving it closer to breaking into the top 40 US banks by size. Data from Token Terminal shows that the net deposit tripled in the last year, with Aave only having $18 billion in net deposits as of August 2024.
The rapid growth rate informed Kulechov’s bullishness as he expected the protocol to reach the $100 billion milestone sooner.
He said:
“At this rate, Aave will reach $100 billion in net deposits by the end of the year, or sooner.”
Unsurprisingly, many people agree with his prediction, showing the general bullish sentiments around the protocol’s performance. CEO of Ethereum treasury company, BTCS, Charles Allen, noted that this will happen sooner, while others expect net deposits to be higher by the end of the year.
Some users have noted the significance of Aave reaching a net deposit of $100 billion. Base Ads Director Antonio Martinez noted that this would put Aave on the same level as Deutsche Bank, the 35th biggest bank in the US.
Aave sees massive demand due to high yield rates
While Aave is hitting new levels in net deposits, the total value locked (TVL) in the protocol is also growing. It closed the second week of August with $38.5 billion in TVL as it continues to cement its place as the biggest DeFi platform.
The growth in TVL is backed by new inflows due to the high demand for yield farming and arbitrage through lending stablecoins. This is likely due to the higher yield rates on Aave, with GHO stablecoin having an 11% yield, while Euro Coin’s yield is double that of any European fintech.
Interestingly, the demand comes from both individual and institutional investors, including other DeFi protocols. For instance, USDe issuer Ethena has $6.4 billion of its assets on Aave. The synthetic dollar protocol uses Aave to maximize its yield generation as its USDe supply grows to $10 billion.
The Aave and Ethena synergy, termed Aavethena, has been described as the DeFi primitive of this cycle by Kulechov. Since the protocol became the first money market to launch the Ethena Liquid Leverage, whales have been depositing sUSDe and USDe, contributing to the surge in Ethena assets on the protocol.
Other assets are also hitting milestones on Aave, with the amount of USDT on Aave now reaching a record high of $8.1 billion. At the same time, the protocol also holds more than 60% of all active BTC among all lending protocols.
Meanwhile, technical upgrades are also contributing to Aave’s performance. The protocol recently released a new software developer toolkit for Aave V3, allowing integration with the Aave markets. The new development comes amidst anticipation for Aave V4.
ETH performance drives Aave momentum
While several factors, such as demand, yield, and strong fundamentals, have driven Aave’s recent growth, observers note that the ETH price, particularly its surge over $4,000, is also key to the protocol’s performance.
ETH has been on a tear over the past few months, rising more than 72% in the past 30 days. With the token now worth around $4,300, 97% of ETH holders are already in profit.
The gains have also increased demand for ETH, with DeFi activity increasing. Aave has been the biggest beneficiary of this increased interest in ETH. For instance, BTCS has been leveraging Aave for loans to fund ETH purchases while deploying funds on the protocol to generate yield.
AAVE token has also seen massive gains in recent months, gaining more than 40% in the past 90 days. However, it remains down 4.28% year-to-date.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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