Aave’s token traded in green territory today as two institutional newspapers positively reviewed the protocol this month.
On the one hand, Zach Pandl, head of research at Grayscale, shared his thoughts on whether Aave could become a household name. On the other hand, the Bank of Canada, in what was its first formal central bank study of the protocol, called DeFi lending “operationally feasible” with good governance.
$AAVE currently is trading around $93.4after peaking near $96.5 during the day. The token has been under pressure for most of 2026, with other governance crises in the first quarter resulting in the departures of BGD Labs and Aave Chan Initiative (ACI).
In Grayscale, Aave becomes a household name
Grayscale’s feelings about Aave have been fairly public for over a year. In October 2024, Grayscale launched the Grayscale Aave Trust, with Head of Product and Research Rayhaneh Sharif-Askary describing the protocol as having “the potential to revolutionize the traditional world of finance.”
Additionally, in February 2026, Grayscale filed with the SEC to convert its trust into a spot-traded ETF targeting a NYSE Arca listing. This move was similar to the same paths they took with Bitcoin and Ethereum that would open up $AAVE exposure to a much broader base of regulated investors if approved.
Grayscale last research post formalizes the investment thesis.
In his Digital Asset Outlook 2026 In the report, Grayscale had initially highlighted Aave as one of the key beneficiaries of a DeFi acceleration expected to take place throughout the year. It was a trend that, according to the outlook, she expects “core DeFi protocols to benefit, including lending platforms like $AAVE.”
The post also argued that the combination of TVL dominance, fee generation, institutional integrations, and regulatory clarity positions the protocol not only as a DeFi leader, but also as a mainstream financial brand in the making.
With the protocol set to generate $141.8 million in revenue by 2025 and TVL controlling up to 60% of the DeFi lending market, Aave’s fundamentals appear to be proof of that theory.
Why is the Bank of Canada bullish on Aave?
The Bank of Canada DeFi Lending: Returns, Leverage and Liquidation Risk paper, written by Jonathan Chiu and Furkan Danisman, was released as something unusual: an in-depth central bank study of a DeFi protocol using transaction data.
According to the paper, protocol revenue was concentrated in just a few tokens, with WETH, USDT and USDC accounting for approximately 83% of Aave’s total revenue.
Apparently, very active and wealthy users, who make up about 2% of the platform, were also involved in risky margin trading. Because these traders bet a lot of money to improve their trades, they get liquidated twice as fast as regular traders, which in turn causes large waves of liquidation during market downturns.
It is not unusual for borrowers to experience 10 to 30% of lost collateral in liquidations, with the ten largest liquidation waves accounting for over 80% of the total liquidated volume.
Nevertheless, the paper acknowledged that despite these risks and the platform’s issues with capital efficiency, liquidation risk and system fragility, they believe there is nothing wrong with the core technology and that only better rules and better management are needed to effectively tackle such extreme events.
However, it should be noted that the Bank of Canada article examined V3, not V4, which launched on Ethereum on March 30, 2026.
The transition to V4 has single-handedly become the most controversial issue in Aave’s recent history. If Aave manages to consolidate its governance and V4 delivers results, Grayscale’s claim about the name could be true.