AAVE Token Price Action Outpaces the Market as TVL Growth Reaches New Heights

AAVE, the native token of the leading decentralized lending protocol, has been making waves in the cryptocurrency market with its recent price action and ecosystem growth

AAVE, the native token of the leading decentralized lending protocol, has been a standout performer in the cryptocurrency market with its recent price action and ecosystem growth.

As of May 22, AAVE is trading between $250-260, reflecting an 11% increase over the past week and approximately 80% gain over the last 30 days. This surge in price has outpaced many other alternative cryptocurrencies, suggesting particular market enthusiasm for the lending protocol.

The token’s strong performance comes amid a broader recovery in the DeFi sector, which has seen Ethereum rise by 60% in the same timeframe.

In the most recent 24 hours, AAVE has experienced a minor correction of about 3-5%, as investors take profits following the substantial rally.

Record-Breaking TVL Growth

One of the most compelling narratives behind AAVE’s rise is the extraordinary growth in its Total Value Locked (TVL). According to data from DeFiLlama, AAVE’s TVL recently reached $24-25 billion, making it the largest individual DeFi protocol by this metric.

On-chain analytics reveal that AAVE’s TVL has increased approximately 3.6 times since January 2024, when it stood at around $6.6 billion. During this same period, the overall DeFi TVL has roughly doubled from $56 billion to $115 billion.

This means AAVE has not only kept pace with the broader market but has substantially increased its market share, growing from 11% to 20% of the total DeFi TVL. These metrics point to robust user adoption across Ethereum and various Layer-2 networks where AAVE operates.

The rising TVL reflects growing user trust and activity, two critical indicators for success in the DeFi space.

Expansion Beyond Ethereum

A key catalyst for AAVE’s recent momentum was the May 19 deployment of its V3 protocol on Aptos, marking AAVE’s first launch on a non-Ethereum Virtual Machine (EVM) blockchain. This integration represents a strategic move to capture users and liquidity beyond the Ethereum ecosystem.

The Aptos integration appears to have resonated with traders and users. Derivatives data shows a 42% jump in AAVE open interest to $576 million immediately following the announcement.

Trading volume similarly experienced a dramatic 90% increase to $1.84 billion during the rally period. These metrics suggest many traders and users are rotating capital into AAVE following the Aptos integration, expanding the protocol’s reach and fueling user interest.

The AAVE team is also actively discussing the addition of new collateral types, including Uniswap V4 LP tokens and the BNB-chained Soneium token.

Technical Analysis

From a technical perspective, AAVE remains in a strong uptrend. The price is trading well above its main moving averages, with the 200-day EMA around $200 and the 10-day EMA/SMA near $237.

With current prices between $250-260, AAVE is trading well above both short and long-term averages, typically considered a bullish signal.

Momentum indicators generally support the positive outlook. The Relative Strength Index (RSI) sits at approximately 71.2, placing it in overbought territory.

The Moving Average Convergence Divergence (MACD) has turned positive, further confirming the bullish trend.

Trade volumes have increased in recent sessions, validating the strength of the trend with a reported 90% volume spike alongside rising open interest.

Short liquidations increased as the price moved higher, indicating bearish positions were forced to close during the rally – another sign of upward pressure.

However, caution may be warranted due to the high RSI reading, which suggests short-term overbought conditions. Traders are watching the $270-280 range as the next key resistance level.

A break above this zone would be needed to maintain the bullish momentum, while potential pullbacks might find support around the 20-day SMA at $214.

The AAVE protocol has demonstrated remarkable growth in loan activity, with over $10 billion in active loans reported. This heightened on-chain utility and real-world usage lend credibility to the token’s price rally.