Aave (AAVE), a leading decentralized finance (DeFi) lending platform, recorded a remarkable $2.1 million in daily revenue following a wave of loan liquidations.
Aave (AAVE), a leading decentralized finance (DeFi) lending platform, recorded a remarkable $2.1 million in daily revenue following a wave of loan liquidations. This surge in revenue is largely attributed to liquidation fees during a recent market downturn.
Stani Kulechov, the founder of Aave, highlighted the platform's resilience in a post on X, stating, “Aave Protocol withstood market stress across 14 active markets on various L1s and L2s, securing $21B worth of value. Aave Treasury was rewarded with $6M in revenue overnight from decentralized liquidations for keeping the markets safe.” Kulechov's mention of $6 million in revenue was based on projections from liquidation fees collected early Monday morning.
The most significant contribution came from Aave’s v3 deployment on Ethereum, which alone accumulated $1.25 million in liquidation fees on August 6. Liquidations on Aave v3 reached a total of $234 million, with $137 million in Wrapped Ether (WETH), $62 million in Wrapped stETH (wstETH), and $21 million in Wrapped Bitcoin (WBTC).
One particular wallet, identified as 0x645…c4bfa, was notably impacted, experiencing $73 million in liquidations. This single event accounted for 31% of the total collateral liquidated on v3.
Aave, like other lending platforms, generates revenue through interest and liquidation fees. In a strategic move preceding the market decline, Aave DAO conducted its first temperature check on a governance proposal aimed at returning protocol revenue to AAVE token holders. Marc Zeller, founder of the Aave DAO delegate, Aave Chan Initiative, indicated that this proposal might be implemented by the end of 2024.
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