Aave is growing in DeFi dominance
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Jul 18, 2025

Aave is growing in DeFi dominance

Darius Moukhtarzade
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In the ever-evolving world of decentralized finance (DeFi), one name stands out as a beacon of innovation and growth: Aave. Recently, this powerhouse reached a monumental milestone, surpassing $50 billion in total value locked (TVL), an achievement that cements its status as the undisputed heavyweight of decentralized lending. Aave is the first lending protocol to achieve that milestone. 

A journey from ETHLend to Aave

Aave, Finnish for “ghost”, has its roots in 2017 as ETHLend, one of the pioneers of decentralized lending. Its mission was clear: to eliminate intermediaries and revolutionize borrowing and lending through smart contracts on Ethereum. In 2018, ETHLend rebranded to Aave, switching from a simple peer-to-peer lending model to a more sophisticated liquidity pool-based approach. This strategic pivot has allowed Aave to flourish in the DeFi ecosystem and stand as a pillar of innovation.

Aave’s unstoppable momentum

The numbers speak volumes. In the second quarter of 2025 alone, Aave’s TVL surged by an astonishing 52%, outpacing the overall DeFi sector, which grew by a modest 26% in comparison. Here’s a glimpse into Aave’s standout metrics: 

  • Generating nearly $94 million in annualized revenue
  • Commanding 60% of the total DeFi lending market
  • Accounting for nearly 20% of all DeFi TVL
  • ETH depositors earned $267.3 million worth of ETH annually

As DeFi returns to growth, with a total TVL of $419 billion, Aave’s dominance in the lending space is undeniable. With nearly $80 billion in TVL, lending is emerging as the clear frontrunner, driven by users seeking risk-adjusted yield opportunities and robust on-chain credit markets.  But it’s not just about locked value. According to a recent report, Aave’s share of total deposits and borrows has jumped from 40% to 60%, accounting for $16.5 billion. The protocol also revealed that cumulative borrows have now surpassed $775 billion.

Despite a strong increase in competition in the DeFi lending and borrowing space, Aave has grown its market share and dominance significantly.

Why Aave is winning

Aave’s continued rise can be attributed to a combination of factors:

  • Cross-chain coverage: Aave operates on more than a dozen blockchains, including Ethereum and its Layer 2 solutions, such as Arbitrum, Optimism, and Base. This extensive reach ensures deep liquidity and accessibility for users across different ecosystems.

  • Institutional adoption: With the upcoming launch of Horizon, an initiative focused on institutional DeFi products, Aave is attracting the attention of fintech companies and traditional finance players alike. This growing acceptance signals a shift towards mainstream adoption of DeFi. 
  • Stablecoin layer: The launch of GHO, Aave’s native overcollateralized stablecoin, has added a new dimension of utility to the platform, boasting a market cap of $312 million and is poised for wider adoption.

  • Flight to quality: In a post-risk-off market, users are increasingly favoring well-audited, battle-tested DeFi protocols with a track record. Aave’s track record positions it as a safe haven for users seeking reliable financial solutions.

With a near-majority control of DeFi lending and increasing traction on Ethereum’s Layer 2s, Aave isn’t just surviving the bear-to-bull transition in DeFi. It’s thriving and setting the pace for what’s next.

What's coming next

Aave shows no signs of slowing down. The upcoming V4 upgrade promises to introduce a new “Hub and Spoke” design aimed at unifying fragmented liquidity and enhancing capital efficiency. This upgrade will introduce account abstraction and native real-world asset vaults, propelling Aave into new territories. 

Moreover, the Aave DAO is exploring proposals to support Bitcoin Layer 2 networks and expand GHO’s reach to additional blockchains. This mix of technical refinement and product expansion positions Aave to scale beyond a crypto-native user base, inviting a new wave of investors to join the journey. 

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