All About Aave Protocol’s Activity In The Last Quarter

Dubbed the “Ghost Protocol,” Aave is non-custody lending and borrowing platform that operates primarily on the Ethereum, Avalanche, and Polygon networks. In a new report from blockchain analytics firm Messari, borrowing and lending activity in the crypto space last quarter was significantly impacted by the Terra disaster and market-wide downturn. As a result, the revenue in the second quarter fell markedly.

According to Messari, the lower demand for leverage by borrowers due to the plunging cryptocurrency prices has resulted in a 18% drop in Aave’s total revenue. In Q1, Aave totaled $63.5 million in revenue. By the end of the second quarter, that number dropped to just $51.8 million.

However, Messari found that while the overall revenue of the protocol decreased, the rate of decline was not the same across the different chains on which the protocol operates. After one of the protocol’s biggest users, Celsius, collapsed, Aave implementations on Ethereum V2 suffered the most in Q2.

According to the report, around 20% of the total outstanding debt on Aave Ethereum was repaid using Celsius’ main exchange wallet between June 9 and July 13.

Despite receiving huge refunds, cryptocurrencies lost more than 50% of their value, so Aave’s revenue on Ethereum dropped about 36% over a 3-month period. It ended the quarter with a total revenue of $30 million. However, the protocol on Avalanche tells a different story.

Total revenue earned from Avalanche increased 20% last quarter. Messari found that the revenue on Avalanche surpassed that on Ethereum for both May and June.

“A large amount of the activity behind Aave’s total revenue on Avalanche is currently subsidized by the Avalanche Rush incentives in the form of native
AVAX tokens.”

Furthermore, the implementation of Aave on Polygon, Arbitrum, Harmony, Fantom, and Optimism did not generate a profit or loss in the previous quarter.

Loans on Aave are made with various cryptocurrencies ranging from stablecoins to unsupported cryptocurrencies. As of Q1 2021, stablecoin loans have contributed 98% of the quarterly revenue. While still high, stablecoin loans only generated 82% of the revenue in the last quarter.

According to Token Terminal, the number of holders on Aave increased by 6% in Q2. As of June 30, token holders on the protocol stood at 114,572. Over a 90-day period, the number of active users increased by 32%.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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