Aave generates $2.1M daily revenue during market downturn

The DeFi lending giant liquidated $234 million worth of crypto collateral on Tuesday

article-image

Aave modified by Blockworks

share

Aave generated $2.1 million in daily revenue amid a flood of cascading loan liquidations on Tuesday, based on TokenLogic data. 

The jump in daily revenue stems from liquidation fees amid the recent market selloff. Aave’s v3 deployment on Ethereum alone raked in $1.25 million in liquidation fees on Aug 6.

Liquidations on Aave v3 totaled $234 million, including $137 million WETH, $62 million wstETH and $21 million WBTC, according to Block Analitica.

The largest liquidated wallet (0x645…c4bfa) saw $73 million liquidated, making up 31% of total v3 liquidated collateral.

Aave founder Stani Kulechov tweeted: “Aave Protocol withstood market stress across 14 active markets on various L1s and L2s, securing $21B worth of value. Aave Treasury was rewarded with $6M in revenue overnight from decentralized liquidations for keeping the markets safe.”

Read more: Aave DAO’s latest move against MakerDAO spurs fears of ‘walled gardens’ in DeFi

Kulechov’s tweet of $6 million in daily revenue was projected revenues based on liquidation fees collected during the early hours of Monday morning.

“On Aug. 5, the Aave DAO was on track to generate over $6 million in daily revenue, driven by $1.51 million in Liquidation Fee revenue recorded within a seven-hour period,” TokenLogic founder Matthew Graham told Blockworks.

Aave did not return a request for comment by the time of publication.

Like all lending platforms, Aave generates revenue from interest fees charged on loans and liquidation fees. 

“When liquidations occur on Aave, liquidators have an incentive to earn a Liquidation Bonus, which varies between 5-10% of the collateral value. A portion of this Liquidation Penalty, called the Liquidation Factor, is directed to a DAO-owned collector contract,” said Blockworks Research analyst Luke Leasure. 

Read more: Empire Newsletter: The suspects behind this weekend’s crash

“As such, liquidations on the protocol are revenue-generating events. While the DAO will no longer earn interest revenues from these closed out debt positions, efficient liquidations are capable of generating substantial revenue for the protocol.”

On Saturday, just before crypto markets fell, Aave DAO passed its first temperature check on a landmark governance proposal that would begin returning protocol revenue to AAVE token holders.

Marc Zeller, founder of the Aave DAO delegate, Aave Chan Initiative, said the governance proposal can be put in place by the end of 2024.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (2).png

Research

This reports analyzes the competitive dynamics of the Solana DEX landscape, identifying sustainable moats per protocol. We also find that Raydium (RAY), Orca (ORCA), and Lifinity (LFNTY) are valued very similarly on a P/S basis and what this could mean for Meteroa's (MET) valuation, which is still pre-TGE.

article-image

With $800 million now flowing to creditors, some expect a market boost — yet many remain cautious after years of waiting

article-image

There’s more to do on Solana than memecoins, but the market isn’t seeing it that way

article-image

Galaxy’s Alex Thorn said that the saga, paired with TRUMP and MELANIA, could lead to “further destruction of the memecoin complex”

article-image

Anatoly Yakovenko in 2017 embarked on the technical challenge of solving blockchain’s scalability problem

article-image

Grayscale Investments has historically had a four-stage lifecycle for its products, but there’s an indicator this could be changing

article-image

Brian Quintenz and Jonathan Gould are two recent Cabinet nominees with ties to crypto