Aave is a lending and leasing platform that operates on the Avalanche, Polygon, and Ethereum networks. According to the latest Messari data, the total market slump and the Terra disaster had a significant impact on the crypto market’s borrowing and lending activity over the past quarter. As a result, Aave’s revenue fell in the second quarter.
In the second quarter, revenue fell.
Messari discovered that the downturn in customer interest caused by falling crypto prices reduced Aave’s revenue by 18%. The project’s first-quarter revenue was $63.5 million. However, Aave reported $51.8 million in revenue for the preceding quarter.
While the protocol’s rates have dropped, the period of fall changed in different chains on the system that houses the protocol (Messari data). In Q2, Aave’s ETH V2 deployment suffered the highest losses as one of its key consumers, Celsius, fell.
According to the document, Celsius’ principal wallet settled around 20% of outstanding debt on Aave ETH between June 9 and June 13. The large repayments, along with over 50% overall drops in crypto assets, resulted in Aave’s ETH showing a nearly 36% income reduction in three months. Aave Ethereum’s revenue during the quarter was $30 million.
Aave’s Avalanche deployment, on the other hand, offered a different story. Avalanche’s entire revenue climbed by 20% in the past quarter. Messari also observed that Aave’s Alpine revenue exceeded its ETH-based revenue in May and June.
What fueled Avalanche’s income surge? Messari noted that Avalanche’s Rush bonuses in AVAX tokens sparked the majority of Aave’s income activities. The incentives reduce the borrowing rate below the deposit rate, allowing borrowers to get nearly risk-free yield by re-depositing bank loans frequently.
Furthermore, Aave’s deployments on Arbitrum, Polygon, Optimism, Fantom, and Harmony did not provide signals for profits or losses in the previous quarter (Messari data). Aave loans are powered by a variety of cryptocurrencies, ranging from unbacked cryptos to stablecoins.
Since the first quarter of 2021, stablecoin loans have accounted for around 98% of Aave’s quarterly sales. Despite their importance, Messari observed that stablecoin loans accounted for only 82% of the protocol’s sales in the preceding quarter.
Is there any progress?
Holders of Aave grew by 6% during Q2 according to Token Gateway. By June 30, this figure had risen to 114,572. Even during 90-day period, the channel’s active user count increased by 32%.