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DeFi protocol Aave meets huge success on Polygon

Photo of: Joseph Stone
by Joseph Stone

The DeFi market’s Aave protocol now has a total value (TVL) of over $20 billion. Its trump card? Polygon.

Decentralized lending and borrowing protocol Aave is on a roll and has big ambitions. Last October, the company raised $25 million. At the time, it was benefiting from the DeFi boom, whose TVL (Total Value Locked) reached $11 billion.

Aave alone now has more than $20 billion of crypto committed to its protocol. The DeFi service is well positioned to take on its main competitor, namely Compound.

Aave now ranks among the top DeFi protocols in terms of TVL. And this progression in the decentralized finance hierarchy, the service owes it in particular to Polygon and its Layer-2 scaling technology.

As Cointelegraph reports, Aave now claims more than $20 billion in TVL thanks to deployments of its version 2 and Polygon. The two versions of the protocol hold $12.6 billion and $7.8 billion respectively.

Aave wanted to supplant Compound? According to DeFi Llama data, it has already done so, with a market share of over 44%, compared to 26.3% for its rival. Launched only 6 weeks ago, its Polygon version would even rank 4th.

Its adoption of its layer-two solution does seem to have pulled its adoption strongly compared to other DeFi crypto lending protocols. Aave is attracting new users at a high rate.

Aave is attracting 50% more new users than MakerDAO and Compound. In May, 44% of Aave users were new to the platform. For its rivals, this ratio is 29.8% and 26.3% respectively.

And Polygon is therefore a competitive asset for Aave. As a reminder, the former Matic Network, aims to make transactions both faster and cheaper than on Ethereum. Polygon uses layer 2 sidechains to achieve this.

The project has been quite successful. This has helped to increase the price of its token. In May, Polygon ranked several weeks in our ranking of the best performing cryptos.

The value of the token has been exploding since the beginning of the year. At the end of January, it was quoted at $0.03. On May 18, before the fall of crypto-assets, it was already pointing at more than $2.45. While the downward trend has affected it, its price remains high at $1.82.

Its recent performance also earns Aave a boost. Its token was trading on June 2 for $398, up nearly 8% over 24 hours. However, since the crash, AAVE has lost nearly 50% of its value. Since May 30, it is growing again.