The decentralized finance (DeFi) industry experienced a revival in 2024, with the total value locked (TVL) soaring to a two-year high of $154 billion as of December 17.
This growth has sparked interest in DeFi protocols and tokens. The AAVE protocol noted in its annual assessment that net deposits reached a record $35 billion in 2024. With this growth, AAVE is now the largest DeFi platform.
Data from DeFiLlama also shows similar growth, with the total monthly fees for the protocol rising to a three-year high of $6.534 million. Meanwhile, revenue reached $1.168 million.
The total amount borrowed on the protocol has also increased to over $14 billion.
The growing activity is driving AAVE's price increase in the fourth quarter of 2024, and if this year's growth is recorded similarly, it could be a good sign for altcoins. However, despite the DeFi revival, the token's daily chart shows an imminent bearish trend.
Aave's net deposits reach $35 billion – what does the future hold?
Leading DeFi lending protocol Aave revealed in an announcement yesterday that its net deposits have reached a new high since 2021. With $35 billion in net deposits, Aave solidified its position as the largest DeFi protocol at the time of writing.
To illustrate this more clearly, Aave's net deposits were $5.5 billion at the end of 2022, projected to increase to $10 billion by the end of 2023. The current figure at the end of 2024 stands at $35 billion, reflecting a growth of over 535% in just two years.
2024 is set to be a transformative year for Aave, as the protocol sees increasing user adoption across multiple blockchains. This year, Aave added support for five new markets, including BNB Chain, Scroll, ZKsync Era, and Ether.fi.
According to the announcement, Aave is preparing to further expand, potentially adding support for six more blockchains. These include Mantle, Sonic, Linea, BOB, Spider Chain, and Aptos, pending approval from the Aave decentralized autonomous organization (DAO).
For the layperson, a DAO is a blockchain-based entity managed by smart contracts and decentralized voting, with decisions made collectively by token holders without any central authority. DAOs can achieve transparency and democratic governance for protocols in a trustless environment.
In addition to expanding into new blockchain markets, Aave has also launched its latest protocol upgrade Aave V4. This upgrade brings significant improvements, such as enhanced modularity, reduced governance overhead, optimized capital efficiency, and innovative features like Hub and Spoke liquidity architecture.
Additionally, Aave's decentralized, over-collateralized stablecoin GHO will also see wider adoption. It is currently planned to extend cross-chain support to various smart contract platforms, including Coinbase's Base and Avalanche (AVAX) by early 2025.
Will DeFi make a comeback in 2025?
Following the election win by the leading candidate, optimism regarding favorable cryptocurrency regulatory policies has driven a significant surge in DeFi tokens.
Moreover, DeFi protocols are becoming increasingly secure, earning greater user trust and resulting in higher deposit volumes and total value locked (TVL). A recent report highlighted a 40% decrease in DeFi exploit rates in 2024 compared to 2023, indicating improved security across the ecosystem.
Additionally, the first quarter of 2025 is expected to be positive for Ethereum (ETH), the second-largest cryptocurrency by market capitalization and home to the largest DeFi ecosystem. Positive price movements for ETH are expected to benefit major DeFi tokens like AAVE, CRV, and Compound (COMP).
Nonetheless, the Solana (SOL) DeFi ecosystem is rapidly gaining attention and catching up to Ethereum in terms of adoption. This development could drive Solana-based DeFi tokens (ORCA and RAY) to new highs.
AAVE Price Analysis
As of the time of writing, AAVE is trading at $328.8, up 2.35% in the last 24 hours. Despite these gains, the token exhibits a bearish double top pattern.
AAVE has rebounded from the neckline of this pattern at $299, indicating that bulls are vying for control.
If the buying activity indicated by the volume histogram continues, and AAVE breaks through resistance at the two peaks ($391), it could invalidate the bearish argument suggested by the double top.
Meanwhile, the Relative Strength Index (RSI) line is tilting upwards. If this line crosses the signal line to form a buy signal, it could trigger a rebound to the resistance level of $391.
The momentum oscillator also shows that the bearish trend is weakening due to the shortening of histogram bars.
Despite these positive signs, traders should also be wary of the key support level at the neckline, as a break below this level could lead to a price drop to $207.
In simple terms
As interest in DeFi heats up again, AAVE's net deposits soared to a historic high of $35 billion in 2025.
If this network growth continues, it will bode well for AAVE's price performance in 2025.