Most DeFi tokens have been performing inconsistently of late. The China crackdown FUD[1] did impact the broader DeFi market to some extent, but it failed to send these tokens into their ‘summer’ mode. However, their recovery over the past week has been notable.
The likes of Uniswap, Curve Finance, and SushiSwap have individually appreciated by 5%-7% in the aforementioned timeframe.
Why is AAVE missing the party?
Over the last 10 days, AAVE has spent more time under the $300-mark than above it. With the drop in value and market cap, the token has been slipping on its overall rankings[2] too. And, quite a few fundamental factors are responsible for the same.
The cumulative value locked in DeFi witnessed a sharp hike[3] from $86.2 billion to over $90.3 billion in just 10 hours. The surge was led by Curve Finance, Uniswap, and SushiSwap. In fact, their individual TVLs recorded surges in the 4%-6% bracket. Aave, however, recorded a 3% dip in the same timeframe.
Aave’s liquidity crunch has primarily been caused by a drop in the number of unique lenders. In fact, the chart below clearly highlights the stark difference in the state of this metric over the past year. Quite inevitably, the pace of liquidity mining has slowed down on the platform.
As a protocol that allows people to lend and borrow crypto, the aforementioned data can be looked at to assess the ill-state of Aave.
Unique Lenders per day – AAVE || Source: Dune Analytics[4]
The weakening fundamentals have had a ripple effect on the state of the token’s on-chain metrics. There has not been an influx of new people into the Aave market of late. According to ITB’s address stats, the number of active addresses has shrunk
