The Aave lending protocol has achieved a significant milestone as deposits of Ethereum (ETH) surpassed 3 million tokens for the first time. This surge in collateral marks a new record, highlighting the growing trust in decentralized finance (DeFi) throughout 2025.
According to data sourced from Sentora, the total ETH deposited into Aave doubled over the past year, underscoring its position as a leader in the lending space. As confidence in DeFi protocols strengthened, a notable uptick in ETH deposits was observed, with users opting to leverage their assets either as direct collateral or through wrapped tokens.
Currently, the utilization rate of ETH on Aave stands at over 94%. This high utilization suggests that Aave may need to adjust its thresholds, as it typically maintains a preferred limit of 92%. A utilization rate exceeding this threshold can complicate fund withdrawals for lenders, raising concerns about the potential redirection of assets into more speculative, less transparent protocols.
For those lending ETH on Aave, the annual percentage yield (APY) is 1.2%, which is notably lower than the returns from standard validator staking. Despite the inherent illiquidity and unpredictability of the lent ETH, the willingness of lenders to increase their deposits into Aave”s vaults reflects a robust demand for decentralized lending options.
The total active loans on Aave amount to $21.4 billion, a decline from over $30 billion reported in September. The recent downturn in ETH prices has prompted users to deposit more tokens into the platform, as traders have begun to regain confidence in the DeFi ecosystem. Over the past year, ETH collateral on Aave has doubled, coinciding with a trend of ETH moving away from centralized exchanges as holders explore on-chain mechanisms to maximize the value of their assets.
Aave currently secures over $32 billion in total value locked (TVL), down from a prior peak of $44 billion as of October 8. The platform”s dominance is evident, as it holds approximately 50% of the total value across lending protocols, which collectively maintain around $64 billion in liquidity. Alongside Aave, other platforms like Morpho have also seen substantial growth, with Morpho”s TVL escalating from $550 million to around $6 billion in the same timeframe.
The recovery of DeFi lending above previous bull market levels has been bolstered by an increased supply of stablecoins. Enhanced liquidation protocols have contributed to a decrease in the frequency of loan liquidations, allowing holders more time to post additional collateral. Aave”s rigorous collateral and utilization requirements have positioned it as a more secure option compared to other lending platforms that have faced issues with over-utilization.
Additionally, Aave”s GHO stablecoin has showcased reliability, with its supply recently climbing to a record 451 million tokens, although it has since been adjusted down to 416 million. As of now, the price of AAVE is recorded at $184.39, reflecting a downward trend over the past three months.
