Aave, the leading lending protocol, will be pursuing a “revenue-led protocol strategy” over the next 12 months, according to its founder, Stani Kulechov.
Kulechov believes this is the next phase for DeFi to move past the phase of token speculation, writing on X, “Sustainable, consistent revenue is what proves that DeFi can evolve beyond pure token speculation into durable businesses backed by balance sheets.”
How does Aave’s revenue compare to other lending protocols?
Data from DeFiLlama shows Aave generated $7.96 million in fees over the past seven days and holds over $14 billion in total value locked (TVL). No lending protocol comes close on either metric, with the next on the list in terms of largest TVL, Morpho, sitting at $7.5 billion, while JustLend trails at over $3.5 billion.
DeFi analyst DeFi Tiger highlighted the gap on X, noting that Aave V3 alone earned more in the past year than the rest of the lending protocols in the ranking combined, adding that while most lending markets are still fighting for market share, Aave is already the credit layer DeFi routes through.
V4 launch gains traction
On May 22, Frax, the news platform linked to DeFi platform Frax Finance, reported that V4’s combined deposits and loans crossed $100 million for the first time, with $80 million in deposits and $25 million in loans. That milestone came just one day after Kulechov himself noted that V4 supply had reached $75 million and incentive programs had gone live.
That same day, Kulechov had posted on X, stating that “Aave [is] going to expand into institutional lending and borrowing with Aave V4 and $GHO.” $GHO is the protocol’s native overcollateralized stablecoin.
Aave has made aggressive expansion bets
Aave has been busy pursuing various initiatives that fit into its revenue-focused strategy this year despite an exploit that led to more than $10 billion exiting its protocol in April. The revenue strategy fits a pattern of initiatives Aave has pursued this year.
Cryptopolitan has previously reported on Aave’s consideration of a yield-based charitable donations feature, which would let users redirect interest earned on deposits to humanitarian causes while keeping their principal intact. That proposal came up in May as a governance temp-check, positioning the protocol as more than a pure lending market.
Earlier, in March, Aave Labs rolled out the V4 Reinvestment Module, designed to put roughly $6 billion in idle stablecoin deposits to work in low-risk yield strategies. The same update introduced email-and-password signups for the Aave App, removing the need for seed phrases and lowering the barrier for new users.
Institutional interest has followed. In April, Grayscale’s Head of Research discussed Aave’s potential to become a “household name,” while a Bank of Canada analytical paper on Aave V3 concluded that DeFi lending with proper governance is “operationally viable.”
Aave’s future
Kulechov’s 12-month timeline will depend heavily on V4 adoption maintaining its current momentum. The institutional integrations also look like an integral part of the strategy, and all these coming together will go a long way in helping the protocol achieve its goal.
There’s also the protocol’s governance that needs stabilizing following a turbulent first quarter that saw the departures of key contributors BGD Labs and the Aave Chan Initiative (ACI).
