Aave Effect: The Ultimate Paradigm of Decentralized Finance Distribution

I will tell you with reason and evidence why AAVE will rise to 1000 dollars.

Written by: Kolten, Aave, Avara

Compiled by: Alex Liu, Foresight News

In the field of decentralized finance (DeFi), distribution capability determines everything, and no one does it better than Aave. With five years of market experience, millions of users, and the deepest liquidity in DeFi, projects built on Aave can achieve scale effects and network effects that are unmatched elsewhere.

The project team only needs to integrate Aave to immediately obtain the infrastructure, user base, and liquidity support that would normally take years to build - this is what is known as the "Aave Effect."

Some key data

Data Source: DefiLlama

Aave is currently the largest protocol in DeFi, and even the largest protocol of all time, accounting for 21% of the total locked value (TVL) in DeFi; 51% of the TVL in all lending protocols; with total net deposits exceeding $49 billion. (Translator's note: it has now exceeded $50 billion)

Although these numbers are impressive in themselves, what is more important is the distribution influence that Aave possesses. For example:

• Ethena's stablecoin sUSDe, after focusing on integrating Aave, saw its deposits on Aave surge from 2 million USD to 1.1 billion USD within two months;
• Pendle achieved $1 billion in deposits just weeks after its PT token was added to Aave, and this figure has now reached $2 billion, making Aave the largest supply market for Pendle tokens;
• KelpDAO's rsETH, after integrating with Aave, saw its TVL rise from 65,000 ETH to 255,000 ETH, achieving a 4x growth in four months.

In addition, Aave also hosts over 50% of active stablecoin assets, making it the largest BTC destination in DeFi, and the only protocol with a TVL exceeding 1 billion USD across four different networks. This distribution capability is unparalleled.

Why is all this happening?

Any protocol can attract deposits through incentives (such as token rewards or liquidity mining), thereby driving the growth of asset supply. Therefore, looking solely at TVL is not sufficient to determine the true activity of a protocol. Now, attracting deposits is a widely understood challenge, while stimulating the demand for asset usage is very difficult—unless you are Aave.

Active Loan Volume, Data Source: Token Terminal

Aave's current active loan amount exceeds 18 billion USD, which has surpassed the total of all competitors combined. Aave is not just a simple staking platform; the assets deposited by users on Aave are lent out or used as collateral to borrow other assets, rather than just "lying in the pool."

This creates a continuous demand mechanism for a positive feedback loop. When an asset is added to Aave, or a project is built based on it, it can instantly benefit from this real market demand. All ecosystem participants benefit from the actual economic activities brought by the active user base.

This is particularly critical for development teams looking to build products based on Aave. Aave has withstood multiple market cycles, consistently gaining the trust of developers and users for five years, and has long managed billions of dollars in assets, well ahead of many popular protocols today.

Moreover, developers building on Aave are not subject to "capacity" limitations. In contrast, Aave can accommodate a significantly higher supply and borrowing scale than its competitors, making it highly feasible for financial technology applications of any size, whether targeting retail, institutions, or both.

Future Outlook

With the upcoming launch of Aave V4, this "effect engine" will continue to expand. The new architecture will bring richer asset support and new lending strategies for developers and users.

All elements that currently constitute the core value of Aave—such as its distribution capability, trust base, active usage rate, etc.—will be further strengthened in V4. If you are interested, it is recommended to read the article "Understanding Aave V4’s Architecture" to gain a deeper understanding of the upcoming updates.