Aave Loses $5 Billion in Total Value Locked (TVL)

    Aave's Total Value Locked (TVL) tumbled to a new high low in the last week of May amid market turbulence.

    For the past few years, Aave has placed in the top 10 highest locked value dApps. However, according to research by BeInCrypto, the platform lost 39% of its TVL earlier this year. On January 1, TVL reached approximately $14.34 billion and then sunk about $8.67 billion on May 24.

    Aave TVL Chart (Source: DeFiLlama)

    As an open-source liquidity protocol, Aave facilitates the creation of unattended liquidity markets, allowing users to earn interest, borrow assets, and build applications. Aave can be found on 7 networks and offers liquidity on more than 13 markets.

    Why is Aave dropping? 

    The main reason for Aave’s TVL significant decline is the overall downtrend of the cryptocurrency market, which led to a decline in total value locked on the blockchains Aave is deployed on.

    Accordingly, Aave’s TVL on Ethereum on the first day of 2022 is around $8.72 billion. Waning investor interest has driven this number down 11%, staying around $7.75 billion on May 24.

    On January 1, Aave’s TVL on Avalanche reached approximately $3.16 billion. On May 24, the TVL on Avalanche was $398 million, down 87% in just five months. On Polygon, the platform’s TVL during the beginning of the year was around $2.47 billion and declined by 78% to $520.82 million on May 24.

    On borrowing, Aave’s TVL was at $12.16 billion on the first day of the year and sank to $3.82 billion in the last week of May.

    Meanwhile, on staking, Aave’s TVL hit around $767.17 million on Jan 1. Declining investor interest in DeFi has driven the array down 66% to $255.52 million within the same period.

    Aave TVL on All Chains Chart (Source: DeFiLlama)

    After dropping more than $5 billion in TVL across blockchains on which it is deployed, Aave is now sitting in the third spot of dApps with the highest locked value, the first and second spot is Curve and MakerDAO respectively.

    TVL Rankings (Source: DeFiLlama)

    Although the TVL decreased, Aave still has a relatively high TVL compared to other platforms such as Lido, Uniswap, Convex Finance, PancakeSwap, Compound, JustLend, Instadapp, SushiSwap, and Balancer.

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