Aave: Where Narratives Converge

Credit underpins every economy, and in crypto, its importance is amplified by the high demand for leverage among onchain participants. In our recent report on Navigating the Lending Landscape, we covered how Aave has cornered the lending market in terms of deposited liquidity and outstanding loans 

This report focuses on Aave’s ability to convert deposited liquidity into revenue, analyzing its key revenue drivers, upcoming catalysts, and the benefits to token holders. Conversations with liquid funds indicate that Aave is already a top holding and a consensus play. We believe an overweight stance is justified given near-term catalysts, including the WLFI token launch and Aave Horizon.

Overview of Revenue

Excluding stablecoin issuers, Aave ranks 10th among DeFi protocols by monthly revenue, notable given lending’s typically lower margins. Peak revenue of $17.3M was reached in December 2024, driven by high demand for leverage. Revenue has since dipped but is regaining momentum, with August 2025 expected to surpass June’s $11.4M.

Aave’s Ethereum deployment remains the dominant source of revenue, accounting for ~90%, up from 83% in July 2024, reflecting its security and deep capital base. Outside Ethereum, Arbitrum contributes 33% of the revenue, while Base and Avalanche each account for 22%. This is especially impressive on Base where Aave faced tough competition from Coinbase aligned Morpho. The loss in market share of Polygon since February this year is in part Aave’s decision to limit lending on Polygon after Polygon’s decision to partner with competitor Morpho to earn yield on bridge deposits.