AAVE Investors Exit Amid Revenue Growth – Who Will Stand Firm Now?

Aave [AAVE] has experienced a notable rise recently, with a 4% increase in its value. But this positive trend appears disconnected from on-chain activities, as a significant number of investors are withdrawing their funds. This article explores the reasons behind the capital outflows and what it could mean for future price actions.

Key Takeaways

Aave [AAVE] has gained 4% in value over the last 24 hours.
Despite the growth, the relationship with on-chain activities is weak, as there are large capital outflows.
Earnings excluding user incentives surged to $12.686 million, making it the fourth-highest quarterly result since inception.
Total Value Locked (TVL) in Aave saw an outflow of $682 million in just a day, totaling approximately $32.23 billion.
While some traders remain optimistic about AAVE's potential, large sell-offs continue to create downward pressure on the asset.

AAVE investors exit despite revenue surge - Who will hold the line now?

Aave's Revenue and Earnings Performance

Recent reports from Aave indicate a significant revenue boost, particularly when excluding user incentives. According to data from DeFiLlama, Aave's earnings surged to $12.686 million, marking the fourth-highest quarterly performance since its launch. This increase reflects a rise in activity and engagement on the platform.

Agave earning data.

Source: DeFiLlama

Furthermore, the fees generated this quarter reached $124.59 million, just over a month into the quarter. This consistent increase in both fee income and revenue suggests a promising outlook for investors evaluating Aave's profit potential. Nonetheless, it is important to note that holders, who together earned $27.3 million from their AAVE investments, have recently started withdrawing from the platform.

Concerns Over Capital Flight

Ongoing capital outflows are a significant concern, as indicated by Aave's Total Value Locked (TVL). In a single day, the TVL experienced outflows of $682 million—a major sell-off that brought the total down to approximately $32.23 billion.

These outflows are not just indicative of profit-taking; they suggest that investors are pulling back from a potential earnings gain of $27.3 million this year (a very encouraging sign), turning instead towards more stable assets like stablecoins.

Aave TVL and token volume.

Source: DeFiLlama

Additionally, trading volumes have simultaneously decreased, indicating that users are not actively engaging with AAVE. The momentum supporting the recent 2.4% price increase has been weak. Presently, trading volume has hit its lowest point since November 2. However, the TVL has shown a slight increase, hinting at some bullish sentiment. Yet, the ongoing outflows apply significant downward pressure on AAVE, which might negatively impact its market position.

Bullish Sentiment Among Traders

Despite the significant outflows from on-chain investors, some perpetual traders continue to expect an AAVE price rally. Currently, the Open Interest Weighted Funding Rate sits at a positive 0.0059% over the past day. This indicates that most of the $282 million market liquidity has come from long traders.

Aave open weighted funding rate.

Source: CoinGlass

Retail investors also seem to share this optimistic outlook, having purchased $1.03 million worth of AAVE in the past 24 hours. During this week alone, purchases have totaled around $8.89 million, nearing double digits. However, these inflows remain insufficient to counterbalance the considerable sell-offs by on-chain investors, who have discarded hundreds of millions in AAVE.

In summary, while Aave shows promising revenue growth, significant investor withdrawals raise questions about the cryptocurrency's future price stability and market performance.