AAVE missed the party last week – why?

Most DeFi tokens have so far developed inconsistently. China’s repressive FUD has affected the DeFi market as a whole to some extent, but it still hasn’t succeeded in putting these tokens into “summer” mode. What was remarkable, however, was the recovery over the past week.

Names like UNI, CRV and SUSHI rose 5-20% over the above period.

Why did AAVE miss the party?

In the past 10 days, AAVE has spent more than $ 300 below the $ 300 mark. As its value and market capitalization decrease, the token has slipped to lower positions in the overall ranking. A number of fundamental factors also contribute to this weak situation.

AAVE 4 Hour Price Chart | Source: Tradingview

Cumulative Value Locked (TVL) in DeFi jumped from $ 86.2 billion to over $ 90.3 billion in just 10 hours. The leading companies are Curve Finance, Uniswap and SushiSwap. In fact, the TVL of each platform increased by around 4-6%. However, Aave saw a 3% decline over the same period.

Aave’s liquidity crisis was mainly due to a decline in the number of lenders. In fact, the graph below shows a significant difference in the state of this indicator over the past year. Of course, the rate of liquidity depletion on the platform is gradually slowing down.

As a protocol for borrowing and borrowing cryptocurrencies, the above data can be viewed as the basis for evaluating Aave’s misfortune.

Number of lenders per day | The source: Dune analysis

Weak fundamentals have spilled over the health of the on-chain index. There has not yet been a single wave of newcomers entering the Aave marketplace. According to ITB address statistics, the number of active addresses fell from over 1.5% to 0.9% in just one month.

The number of lines from the exchange also decreased, suggesting a lack of buying momentum. In fact, falling yields do not provide any incentive for new participants to buy tokens or enter the AAVE market.

At the time of writing, more than half of the addresses are nominally losing money.

Address statistics in profit / loss status | The source: IntoTheBlock

Totally desperate?

Against the background of most dire indicators, the pace of development of the protocol really eases anxiety. As can be seen from the chart attached here, the index has risen rapidly in recent weeks. Additionally, this will most likely have a positive impact on fundamentals in the near future.

In addition, the youngest AAVE “colleagues” do better on most fronts. The DeFi market often tends to rise and fall together. Therefore, if UNI, SUSHI, CRV and others continue to do well, the favorable environment will help AAVE recover.

Development activities | The source: mood

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Minh Anh

According to AMBCrypto

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