The GHO stablecoin is set to be released this year.
Bringing with it huge liquidity and inflows to the @AaveAave protocol.
This could be the catalyst that sends the DeFi giant to new heights.
Here’s everything you need to know about Aave in 2023. 🧵👻
Let's dive in ...
AAVE
Price = $71.06
DeFi Lending
Market cap = $1b – Rank 52
All time high = $661.69 (-89%)
All time low= $26.02 (173%)
Aave is one of the OG DeFi projects built on Ethereum.
It is a decentralized money market protocol where users can lend and borrow cryptocurrency, using other crypto assets as collateral. It has 2 main products
Flash loans
Normal overcollateralized loans
Like a traditional bank, there are two main user groups
Lenders- Provide liquidity & earn interest
Borrowers- Use crypto assets as collateral to borrow against LPs
The main difference is that you actually self custody your funds in a decentralised manner using Aave.
Revenue
Amongst other lending protocols, Aave comes in 2nd for 7-day total revenues. Over the last 24hrs numbers are …
Revenue = $34.8k
Fees = $249.8k
Fees and revenues are 90% down from the peak in 2021. Bear market blues.
8.5 for Revenue.
Treasury
Aave has the 9th largest treasury amongst projects listed on DeFi Llama. Coming in at $129.25m. A decent size for its market cap. With 70% of treasury in it's native token, there is at least some diversification into stables.
8.5 for Treasury.
Tokenomics
When the protocol was launched under the name of LEND- 23% went to the founders and project while 77% went to investors. The initial token distribution for the project was
20% - Marketing
10% - Unknowns
30% - Core dev
20% - UX dev
20% - Management
Now, the AAVE token distribution is fairly well decentralised. The largest wallet (20%) is staked AAVE in the SM pool. Excluding exchanges, the largest individual wallet holding is 0x3744 which has only 1.45% of total supply according to @bubblemaps.
The AAVE token has two main utilities
Governance (DAO)
Staking
Users that stake their tokens into the Safety Module (SM) are helping to secure the protocol in exchange for rewards paid in AAVE. Rewards are issued from the ecosystem reserve (% is decided by governance).
Currently you can earn a 6.13% APR staking AAVE. The only criticism of Aavenomics is that yield is paid to stakers in the native token (Not ETH or stables like some other protocols).
8.5 for Tokenomics.
Locked up funds
These are the current supply stats
Initial supply = 16m
Circulating supply = 14.36m
Market cap = $1b
FDV = $1.1b
Market cap/ FDV = 0.9
90% of the tokens are in circulation, with the remaining Ecosystem reserve funds unlocked by 2027.
9 for Locked up funds.
Use case
Total TVL is sitting at $5.16b – 3rd amongst all other protocols listed on DeFi Llama (behind Lido and Maker). Aave is one of the most battle tested protocols in DeFi and has pioneered non-custodial and decentralised lending. Aave has been forked over 16 times.
I expect that DeFi lending will see excellent growth as more people lose trust in traditional banks. Aave are well positioned to capitalise from this. However, they will need to continue innovating as there is plenty of competition (Radiant, Compound).
8.5 for Use case.
Roadmap
Aave V3 was released on Ethereum mainnet in January 2023, its most significant upgrade to date. Some improvements include
Better capital efficiency
Risk mitigation features
25% reduction of gas fees
The next biggest milestone for Aave will be the release of their decentralised stablecoin- GHO on mainnet. While GHO was released on the Goerli testnet in Feb, there has been no firm date set for the full release. Read more about it in @ipor_interns thread
https://twitter.com/ipor_intern/status/1581567543914872834?s=20
8 for Roadmap.
Team & funding
Aave (formerly ETHLend) was founded by @StaniKulechov in 2017. In recent years, the team has grown to over 120 employees. All major protocol changes are decided through the Aave DAO governance forum and there is a strong focus on decentralisation.
Since it’s inception, Aave has raised over $49m from investors such as
Blockchain Capital
Standard Crypto
Blockchain.com Ventures
ParaFi Capital
Framework Ventures
8 for Team & Funding.
Summary
TLDR summary for each category’s score out of 10.
8.5 - Revenue – $34.8k daily revenue
8.5 - Treasury– $130m in Treasury
8.5 - Tokenomics – 6.13% APR staking AAVE
9 - Locked up funds – 90% tokens in circulation (16m max supply)
8.5 - Use case – $5.16 TVL, leader DeFi lending
8 - Road map – V3 released, GHO anticipation
8 – Team & funding – $49m raised from investors.
TOTAL- 8.4 weighted avg. score
Aave is one of the largest and most trusted DeFi protocols. It commands over $5b in TVL and has launched on over 7 different chains. Every day, people are losing trust in centralised financial entities such as banks and are transitioning to decentralised finance alternatives.
Aave are well positioned to benefit from this shift and their release of the GHO stablecoin in 2023 will be a key catalyst for growth.
The purpose of this thread is for education and research- not financial advice. Always DYOR before Apeing in. Here is a framework I prepared earlier. The current macro conditions are still very choppy so stay safe out there frens.
https://twitter.com/jake_pahor/status/1603039685609152515?s=20&t=7ffpmNn4CGlUR9pBxRWpvA
Tagging some other accounts to follow if you are interested further.