Leading DeFi protocol Aave plans to enable a Fee Switch for its users, distributing a portion of its revenue to its token holders. The credit platform’s founder, Stani Kulechov, announced this in a post on
The statement follows a report that Aave’s treasury, excluding AAVE tokens, has surpassed $75 million, a sign of the protocol’s robust performance. Talks about a rate change for Aave are not new, as the Aave DAO will conduct a temperature check on the issue in 2024.
Since many people supported it at the time, the platform seems ready to implement the final governance proposal. A fee switch returns value to the protocol users by allowing the platform to distribute a portion of its revenue to its ecosystem participants.
Unsurprisingly, the idea of a rate change is something that many people support, as they believe it would make holding the AAVE token even more beneficial. At the time of the temperature check, Marc Zeller, founder of the Aave Chan Initiative, noted that the proposal to allow a rate change could initiate a renewal of the Aave Protocol.
With the move to fees looking more likely than ever, many crypto enthusiasts think this would be great for Aave and DeFi. Interestingly, other leading DeFi protocols, including Uniswap, have considered enabling the same mechanism.
Aave’s net deposits increased by $25 billion by 2024
Meanwhile, Aave’s decision to opt for a rate change is not surprising given the success of the protocol. The lending platform is one of the best performing DeFi protocols based on several metrics, including total value locked (TVL). Data from DeFiLlama shows that the company has $21.63 billion in TVL, which is up 5.5% over the past seven days.
However, Aave’s net deposits stand out. The protocol saw net deposits increase by $25 billion in 2024, from $10 billion in 2023 to $35 billion at the end of last year. According to Token Terminal, net deposits have surpassed $36 billion, making it the largest DeFi protocol.
Part of Aave’s success is due to the problems of other leading DeFi protocols, such as Curve, with its massive outflows, and Sky, formerly Maker, with its complex restructuring plans. Still, Aave had to compete with several other lending protocols, such as Morpho Labs, Compound, and Spark.
In addition to net deposits, the protocol also has the largest active loans, at $14.99 billion, and has collected a total of approximately $500 million in fees over the past twelve months.
What’s next for Aave?
Despite the news that Aave will enable a rate change, the AAVE token did not see any significant changes in its price. This indicates that the market has not yet priced in the announcement. Still, the token has soared in recent weeks, gaining more than 35% in the past 30 days to reach $352.
It is currently among the top 30 cryptocurrencies by market capitalization, and many believe it could see more substantial growth in 2025. This is very likely, given the planned extensions of the protocol.
Aave currently has 13 markets spread over 11 chains. By 2025, it plans to add six new chains, including Mantle, Aptos, Sonic Linea, BOB and Spider Chain. It also plans to expand its GHO stablecoin, which currently has a market cap of around $150 million, to the Avalanche and Base Layer 2 networks to increase its usage.
The protocol now focuses on the development of the Aave V4 as part of the Aave 2030 plan. The V4 offers improved modularity, capital efficiency and more innovations.
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