The decentralized finance platform, AAVE, has been a major player in the cryptocurrency sphere for the past year. It established itself as one of the most active and expandable DeFi platforms on the Ethereum blockchain. Nevertheless, the current situation brings up some concerning aspects.

The Total Value Locked (TVL) of AAVE v2 on Ethereum has decreased drastically, from an all-time high of $11 billion to a total of $2.9 billion. Despite this decline in assets, AAVE still manages to maintain a liquidity of over $76 billion. Even more impressive is the AAVE daily loan origination of USTD, that has risen to $51.83 million. Earners of AAVE are able to receive the highest Annual Percentage Yield (APY) of 6.52% on BAL and 3.03% on USDC deposits.

The worrying part of the data is found in the AAVE outflow volume, which has been on a continuous decline for some time. The high point in this respect hit 43,4k, where the platform is currently situated at a low of 6.87k. This goes in line with the AAVE daily active addresses, which peaked in October of 2020 and has been slowly declining ever since.

Following up on this trend, AAVE V3 recently was launched on the Ethereum Layer 2 Metis Network. The deflationary nature of the asset sees its market capitalization dropped to $917 million while its daily volume sees seemingly light movements. It is trading at around the value of $64.

The weekly technical chart of the AAVE suggests a consolidation of the asset’s price, which trades right at or below the 50 and 100-day Moving Averages. Its correlation with Ethereum is currently around 84%. As for what the future holds, the resistance any gains can face will remain at $80. The support for any potential declines is located at $50. The Relative Strength Index (RSI) of the asset’s price is situated at a worrying 35, indicating it is in the overbought zone.

In conclusion, while the AAVE outflow volume and daily active addresses may be concerning to some, the DeFi platform still has some unique benefits to offer users. Investors should research the asset fully before making any decisions.



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