TradeCityPro | Deep Search: In-Depth Of AAVE
2025-02-09
Category: None

👋 Welcome to TradeCity Pro! 
In this analysis, I will thoroughly examine the AAVE coin. The project information is provided in full, followed by a technical analysis at the end.

 What is Aave❓ 

▪️Aave is a decentralized lending protocol that allows users to deposit crypto assets to earn interest and borrow against their crypto collateral. It operates on lending pools, providing instant access to liquidity. Aave is known for stable interest rates, flash loans (collateral-free loans for a single transaction), and being one of DeFi’s largest lending protocols, with over $5 billion locked in total value.

 🗾 Protocol Architecture: 

▪️Aave's ecosystem is built on smart contracts that manage deposits, loans, and interest rates. The key components include:
1) Lending Pool Core: Manages asset storage and reserve states.
2) Lending Pool Data Provider: Calculates user balances and lending metrics.
3) Lending Pool: Enables deposit, redemption, borrowing, repayment, and liquidation.
4) Lending Pool Configurator: Allows governance to modify protocol parameters.
5) Interest Rate Strategy: Adjusts interest rates dynamically based on pool utilization.
6) Governance: Users can vote on protocol updates using the AAVE token.

 🔑 Key Features and Functionality: 

▪️Lending Pools: Users deposit assets into pools and receive aTokens, which accrue interest over time.

▪️Borrowing: Users must provide collateral exceeding the borrowed amount, ensuring protocol security.

▪️Interest Rates: Variable rates fluctuate based on market liquidity. stable rates provide consistency but can be adjusted under extreme conditions.

▪️Health Factor & Liquidation: A health factor below 1 triggers liquidation, ensuring the system's stability.

▪️Flash Loans: Uncollateralized loans that must be repaid within a single transaction, offering arbitrage and refinancing opportunities.

🪙 Tokenization & Revenue Model:

▪️aTokens: Earn interest automatically, reflecting deposits.

▪️AAVE Token:
◽️Governance participation and voting rights.
◽️Fee discounts for users using AAVE.
◽️Staking in the Safety Module for additional rewards.

📊Revenue Sources:
◽️Flash loan fees.
◽️Borrowing interest payments.
◽️Protocol fees used for reserves and development.

 🔧 Security and Stability Mechanisms: 

▪️Loan-to-Value (LTV): Determines borrowing capacity based on collateral.
▪️Liquidation Thresholds: Prevents undercollateralized loans from destabilizing the system.
▪️Rebalancing Mechanism: Adjusts stable interest rates to maintain equilibrium.

 🎯 Roadmap and Future Developments: 

▪️Governance Evolution: Further decentralization through Aave Improvement Proposals (AIPs).
▪️Aave V3: Enhancing risk management and capital efficiency.
▪️Multi-Chain Expansion: Reducing transaction costs and increasing accessibility.
▪️Institutional Adoption: Aave Arc for regulated entities.
▪️New Lending Markets: Expanding supported assets and features.

 What is GHO❓ 

▪️GHO is a decentralised, overcollateralised stablecoin that is fully backed, transparent, and native to the Aave Protocol.

▪️Unlike many stablecoins, the oracle price for GHO is fixed. Decentralised stablecoins such as GHO are transparent and cannot be changed. Interest rates are defined by Aave DAO and repaid interest is redirected to the DAO instead of the asset suppliers. Discounts are available to borrowers staking AAVE in the Safety Module.

 💰Fundrasing: $49.30 M
 
 💵 Some of its major investors:
 
▪️Standard Crypto
▪️Blockchain.com Ventures
▪️Framework Ventures
▪️Blockchain Capital
▪️DTC Capital
▪️Defiance Capital
▪️ParaFi Capital

 ◽️The staking platforms of AAVE:
 
▪️aave.com
▪️Defiserver
▪️Stakingcrypto.io

 ◽️The Lp platforms of AAVE: 

▪️Balancer
▪️Pancakeswap
▪️Uniswap
▪️Defiserver
▪️KyberSwap
▪️HoneySwap
▪️SquadSwap

 👥The Team: 
▪️Aave was created by the team behind ETHLend, led by CEO Stani Kulechov. The team transitioned from peer-to-peer lending to the pool-based system, which has contributed to Aave's success. It has a strong commitment to decentralization, having moved to community governance.

 📈 TVL and Staking: 
▪️Aave Protocol's TVL Sees Significant Growth Since Late February 2024
The Total Value Locked (TVL) in the Aave protocol has experienced a sharp upward trend since late February 2024, reaching 7.65 million Ethereum. Additionally, the amount staked in 2024 has tripled, which could reduce the currency's inflation within the network and potentially lead to a long-term price increase




 🔗 On-Chain Data Analysis of AAVE: 

▪️From the perspective of the volume of coins in profit and loss, the $228 zone with 1.67 million AAVE coins in profit can be considered a support level. Additionally, the $257 zone with approximately 700,000 AAVE acts as a resistance level. However, the number of coins in profit remains higher.

▪️The size of large transactions increased as the price reached resistance zones, reflecting selling pressure from this group. However, at present, no significant changes in large transactions are observed. Moreover, active addresses remain neutral.

▪️On the other hand, we find that whales hold about 55.3% of AAVE tokens, which indicates that whale movements are of great importance. In this regard, examining the inflow of AAVE into large holders' wallets, we observe that they have been accumulating as the price declined.





 📅 Weekly Timeframe 
In the weekly timeframe, not much has changed compared to the previous analysis. After the price reached the $371.48 support and was rejected from this area, the corrective phase continued until the Minor Support zone at $202.63. However, the bullish momentum in this coin was strong enough that the price only wicked down to this support and has now returned above this area.

🔍 The parabolic trendline still exists and could act as an important level in case of further corrections. Breaking this trendline would weaken bullish momentum, making the uptrend slower.

✔️ If the $371.48 resistance breaks, we can expect the price to move towards the ATH at $532.60. If the $543.60 resistance is also broken, I will update the analysis to determine potential new targets for AAVE.

🔽 On the bearish side, if the trendline breaks and a candle closes below $202.63, the market's bullish momentum will weaken, and the price could experience deeper corrections, potentially reaching $130.24 and $77.45. The primary support level is at $51.76, but for now, reaching this area seems unlikely.

📊 The candle volume has been increasing since the price started its bullish trend from $51.76, aligning with the uptrend. The RSI is also in a good position for an uptrend, with no visible divergence. As long as this oscillator stays above 50, the bullish momentum will remain intact.



 📅 Daily Timeframe 
In this timeframe, we can observe price movements in more detail over the past few weeks. As you can see, after breaking below the $282.15 low, the price has corrected to the 0.5 – 0.618 Fibonacci retracement zone.

✨ Currently, it seems that the price is forming a base. If it can establish a strong support in this area, the next bullish leg will begin with greater momentum and strength.

⚡️ The candle volume is decreasing during the correction phase, indicating seller weakness. Since selling volume has not significantly increased, if buyers re-enter the market, the price could move upward.

🔼 If the price returns above $282.15, the bullish scenario will become more likely, and breaking $382.61 will confirm the next bullish leg.

📉 On the bearish side, if the correction continues and the price reaches the $194.97 support, a break of this support would confirm a trend reversal and shift the market to a bearish outlook. A break of RSI 30 would strongly support this bearish scenario.



📝  Final Thoughts 

This analysis reflects our opinions and is not financial advice.

Share your thoughts in the comments, and don’t forget to share this analysis with your friends! ❤️