51% market share, $18 billion in real lending, how did the "Aave effect" sweep every corner of DeFi?

Aave dominates the DeFi lending market with a 51% share and $18 billion in active loans, leveraging its deep liquidity, extensive user base, and network effects to create the "Aave effect."
Key metrics include 21% of DeFi's total TVL, $49 billion in net deposits, and rapid growth for projects like Ethena (sUSDe), Pendle, and KelpDAO after integrating with Aave.
The platform’s success stems from real demand for borrowing and collateralization, ensuring deposited assets are never idle, unlike protocols reliant on temporary incentives.
Aave’s scalability supports deposits and loans of any size, attracting both retail and institutional users, while its proven resilience over five years builds trust.
The upcoming Aave V4 aims to further enhance accessibility and lending strategies, solidifying its position as DeFi’s leading lending protocol.

Compiled by: Tim, PANews

In the DeFi space, network effects determine success or failure, and no one does it better than Aave. With five years of market accumulation, millions of user bases, and the deepest liquidity in the DeFi space, projects built on Aave will gain unparalleled scale and network effects, which are the core advantages that other platforms cannot replicate.

Partners gain instant access to infrastructure, user base, and liquidity that would normally take years to build independently. This is what we call the "AAVE effect."

Some data

 Source: DeFiLlama

Aave is the largest protocol in the current DeFi field, or more precisely, the largest protocol ever. Its TVL accounts for 21% of the entire DeFi market, 51% of the lending market, and its net deposit scale exceeds 49 billion US dollars. Although these data are shocking enough, the real core lies in Aave's market penetration. For example:

After Ethena’s sUSDe expanded its business on Aave, deposits surged from $2 million to $1.1 billion in just two months.
Within a few weeks of Pendle being added to Aave, users deposited $1 billion worth of PT tokens. That number has now doubled to $2 billion, making Aave the largest supply market for Pendle tokens.
After rsETH was included in the Aave protocol, KelpDAO’s TVL soared from 65,000 ETH to 255,000 ETH in just four months, a 4-fold increase.

There are too many examples to list. Aave carries nearly 50% of the active stablecoin market and is the primary circulation hub for Bitcoin in DeFi. What is particularly noteworthy is that Aave has achieved nearly $1 billion in TVL on four independent blockchain networks. Such a deep layout is rare.

How does the Aave effect come about?

Anyone can incentivize deposits and scale the supply side through token rewards and yield mining programs. This is why TVL is not always a meaningful metric on the surface. In fact, attracting capital supply is now seen as a solvable problem, but creating demand for asset usage is much more difficult, unless you are a platform like Aave.

 Source: https://tokenterminal.com/explorer/markets/lending/metrics/active-loans

The Aave platform has an active borrowing volume of over $18 billion, far exceeding the sum of all its competitors. The protocol is not a simple advanced collateral contract. When users deposit assets into Aave, these assets are either borrowed or used as collateral to borrow other assets. In other words, funds are never idle.

This creates a positive cycle of continued demand reinforcement. When an asset is listed on the Aave market, or a development team builds on it, they all benefit from this demand. Everyone ultimately benefits from the real economic activity generated by a large and active user base.

This is critical for teams building on Aave. The protocol has been tested for five years and has gone through multiple market cycles, always winning the trust of developers and users. As a major platform for billions of dollars in funding, it far exceeds many emerging protocols today.

 Source: Block Analitica

In addition, developers on the Aave platform are not limited by "volume". Compared with other protocols, Aave can support deposits and loans of tens of millions of dollars. This allows fintech applications of any size (retail user level, institutional level, or both) to be robustly developed on this platform.

Outlook

When Aave V4 goes live, the core engine driving the Aave effect will continue to develop. Its new architecture will provide builders and users with unprecedented asset access channels and unique lending strategy solutions. (Related reading: " Detailed explanation of Aave V4: How can the lending leader build a moat again? ")

All of the factors that make Aave valuable for DeFi today will become even more significant in the future.