The second biggest DeFi protocol in the world, AAVE took a massive hit over the last three months after the total value locked on the lending dApp fell from $14 billion to $5.03 billion. That’s not all. AAVE was also affected during the recent Harmony hack, which resulted in a $100 million exploit. Considering the altcoin’s tough road, it can be stated that…
…AAVE is not in “Harmony”
The Ethereum-Harmony bridge that was exploited also affected AAVE V3 Harmony. The protocol was disrupted as the assets exploited were also listed on the protocol, specifically DAI, USDC, USDT, and AAVE.
However, since V3 was not the primary target of the attack, it did not endure any losses. The only losses it has faced have been the result of the broader market’s bearishness which caused a 21% decline in its value. However, the asset rallied by 12.7% in the last 24 hours, igniting optimism among its investors.
But it isn’t certain if the rally triggers a recovery in the case of the altcoin, it will still need a lot more than a green bar. Trading at $63.07, AAVE can still possibly climb the charts since the token has the support of its investors, which is becoming relatively rare these days.
On an average, AAVE investors have been conducting transactions amounting to more than $40 million, with the same peaking at $127 million towards the end of June.
This is despite the fact that more than 89.5% of AAVE holders have been facing losses for more than a year now. The last time all AAVE investors were in profit was back in January 2021.
What is AAVE up to?
This also began affecting the average balance on each investor’s wallet since the rest of the market continued to remain stuck in a downtrend, and at the same time, AAVE investors also refrained from exiting the market. Consequently, the average balance went down from the height of $175.3k in February 2021 to just $8.1k dollar as of 4 July.
Going forward, what investors will resort to cannot be said since AAVE shares a very high correlation of 0.89 with Bitcoin, making it susceptible to a price fall as much as it opens the opportunity for a rally.