Aave is a decentralized lending and borrowing platform that operates on the Polygon, Avalanche, and Ethereum blockchains. According to the latest data from Messari, lending and borrowing in the cryptocurrency market were hit hard by the market decline and the Terra scandal in the previous quarter. As a result, Aave’s Q2 sales fell.
There was a decline in sales during the second quarter.
According to Messari, Aave saw an 18% loss in revenue as a result of the decline in borrower demand caused by falling crypto prices. As of the first quarter of the project’s life cycle, it has generated $63.5 million in revenue. While everything was going on, Aave closed the previous quarter with $51.8 million in revenue.
Although overall protocol revenue fell, the decrease phase varied between chains on the platform that hosts the protocol (Messari data). Due to a decline in activity from one of its top customers, Celsius’s ETH V2 implementation suffered the most in Q2.
According to the data, between June 9 and June 13, Celsius’s main wallet repaid nearly 20% of its existing debt on Aave ETH. Aave’s ETH revenue dropped by roughly 36% within three months due to the huge repayments plus the over 50% general drops in crypto assets. Revenue for Aave Ethereum was $30 million for the quarter’s conclusion.
But Aave’s Avalanche deployment showed another side of the matter. As a whole, Avalanche’s revenue jumped by 20% in the preceding quarter. Messari also found that in the months of May and June, Aave’s Avalanche revenue was higher than its ETH-based revenue.
Why did Avalanche’s sales suddenly skyrocket? According to Messari, most of the action in Aave’s earnings was prompted by Avalanche’s Rush incentives in AVAX tokens. Borrowers can earn nearly risk-free yield by regularly depositing borrowed funds thanks to the incentives, which reduce the borrowing rate below the rate to give to depositors.
In addition, Aave’s deployments on Arbitrum, Polygon, Optimism, Fantom, and Harmony did not show any signs of decline or improvement over the preceding three months (Messari data). Loans on Aave are fueled by a wide range of cryptocurrencies, from those with no backing to stablecoins.
Since 2021 Q1, around 98% of Aave’s quarterly revenue has come from stablecoin loans. Messari found that the protocol’s revenue was 82% stablecoin loans, which is still rather substantial.
Token Terminal data reveals a 6% Q2 growth in Aave holders. As of the end of June, this figure had been stable at 114,572. In the past 90 days, the network has seen a 32% increase in its active user base.