DeFi protocol Aave generates millions of income amid the collapse of the crypto market

Aave Decentralized Finance (DeFi) protocol has shown resilience in the face of the overall crypto market downturn.

The platform generated $6 million in revenue during its current market share.

Ave has withstood the market turmoil

In an Aug. 5 post on X, Ave founder Stany Kulekov said the protocol has successfully handled the total stress on 14 active markets on various Layer 1 and Layer 2 blockchains, generating $21 billion in value.

Stani said Aave's revenue growth was mainly fueled by decentralized liquidity, which is a mechanism to help maintain market stability by selling securities when positions fall below desired levels.

The general decline in crypto prices led to a lot of liquidity on the platform, which contributed significantly to Ave Treasury's overnight revenue of $6 million. One notable liquidation involved a $7.4 million stake in Ether (WETH), which netted $802,000 for Aave.

The latest market decline was triggered by the Bank of Japan's decision to raise interest rates last week and a disappointing US employment report on Friday. The impact was felt across the crypto sector, with Ether (ETH) down more than 20% in the last 24 hours and Ave Native Token (AAVE) losing 25% in market capitalization.

According to data from Parsec Finance, the selloff led to more than $1 billion in liquidity in crypto derivatives markets, including an additional $350 million in liquidity on DeFi protocols.

Crypto community response

Stani emphasized the importance of this achievement, saying, “This is why building DeFi is FTW. The crypto community echoed the sentiment, with many praising Ave's tenacity.

The MagnifyLab co-founder said, “I'd love to see AAVE caught up in this kind of disruption. DeFi is evolving,” another user commented, “It's a builders market. Builders will be rewarded. DeFi is FTW. DeFi has been around for a long time in crypto. Everything else is obsolete.”

According to Defillama data, the total value (TVL) locked in DeFi protocols dropped from $100 billion to $74 billion at the beginning of the month. Despite the current downturn, the DeFi sector is showing signs of revival.

Token Terminal recently reported a significant increase in revenue loans in the DeFi sector, reaching $13.3 billion. This credit activity, last seen in early 2022, suggests leverage in the sector may increase, a trend associated with the start of a bull market.