DeFi Sector Sees Aave's Dominance, Accounting for 31% of the $49 Billion Total Value Locked Increase
In the dynamic world of decentralised finance (DeFi), Aave has emerged as a leading player, driving growth and maintaining the sector's vitality even amidst market corrections. Since April 2023, Aave has significantly contributed to the expansion of DeFi, consistently increasing its total value locked (TVL) and deposits, reaching record-breaking levels.
The on-chain market rally that Aave is building on has continued since late October 2023. At the heart of Aave's success is its decentralised finance platform, which allows users to lend and borrow crypto assets without traditional intermediaries. Borrowers on Aave access funds by supplying collateral, a system that has proven popular and effective.
Aave's growth reflects its leadership position among DeFi platforms. As of late 2024, Aave's deposits accounted for approximately 45.5% of the total deposits within the top DeFi applications, combined with Lido, which had $33.4 billion in deposits. Despite a 27% drop in Q1 2025 in DeFi's total TVL, Aave's expansion indicates strong user retention and continued trust in its lending and borrowing protocols.
In a bid to drive institutional adoption of on-chain lending and extend Aave's technology reach, the platform is preparing to deploy a centralised version of its DeFi lending service on Kraken's Ink blockchain. This move could open new revenue channels while receiving a portion of borrow volume fees equivalent to a 5% reserve factor.
The Ink Foundation has pledged funding to develop the protocol, furthering Aave's ambitions. The deployment of the centralised version of Aave's DeFi lending service on Kraken's Ink blockchain was approved with 99.8% by the Aave community.
Aave's native token, AAVE, has climbed above $330, gaining nearly 36% over the past month. This growth comes as Aave introduces its Horizon plan to ramp up real-world asset adoption on DeFi rails.
Users who provide assets to Aave's liquidity pools can earn interest, incentivising participation in the platform. Interest rates on Aave are determined automatically according to supply and demand conditions.
In 2021, Aave launched its permissioned Aave Arc protocol, integrating KYC and anti-money-laundering measures. This move was a strategic step towards ensuring regulatory compliance while expanding Aave's reach.
Recently, Aave disclosed it is now the first DeFi lending protocol with net deposits of more than $50 billion. Aave accounted for around $15 billion of this increase. DeFi protocols have added approximately $49 billion in net total value locked (TVL) since April, with Aave representing roughly 31% of the total growth across DeFi platforms during the period.
This growth underscores Aave's pivotal role in driving DeFi growth, helping to maintain the sector's vitality even amidst market corrections. Aave's Arc protocol was used in Project Guardian under Singapore's central bank to tokenize assets, further highlighting its impact on the DeFi landscape.
Sources: [1] CoinDesk (2025). Aave Hits $40.3 Billion in Net Deposits, Reinforcing Its Dominant Role in DeFi. [online] Available at: https://www.coindesk.com/business/2025/05/01/aave-hits-40-3-billion-in-net-deposits-reinforcing-its-dominant-role-in-defi/ [Accessed 1 November 2023]
- The on-chain market rally that Aave is building on continues, with both Bitcoin and Ethereum seeing increased activity within the Aave platform due to its decentralized finance (DeFi) offerings.
- As technology advances, Aave is preparing to deploy a centralized version of its DeFi lending service on Kraken's Ink blockchain, aiming to drive institutional adoption and extend its reach in the crypto industry.
- With deposits accounting for approximately 45.5% of the total deposits within the top DeFi applications, Aave is a leader in DeFi finance, demonstrating strong user retention and trust in its lending and borrowing protocols.
- Despite market corrections, the growth of DeFi through platforms like Aave has been significant, with Aave representing around 31% of the total growth across DeFi platforms since April, leading to record-breaking levels of total value locked (TVL) and deposits, even in challenging market conditions.
