Key Highlights
- $AAVE has underperformed Bitcoin and Ether over the comparison period.
- Aave’s total value locked fell about 13.5%, from $17.95 billion to $15.53 billion.
- LlamaRisk proposed winding down $1.33 billion of collateral in Aave V3 Core while initially avoiding immediate liquidation of existing loans.
$AAVE Underperforms Bitcoin and Ether
Aave’s native token, $AAVE, recorded steeper losses than Bitcoin and Ether over the reported comparison period. The low cited for the comparison comes from aggregated price samples rather than an intraday record on any single exchange. The data demonstrates $AAVE’s underperformance against the two major cryptocurrency benchmarks, but does not establish why the token suffered additional losses.
Aave TVL Declines Less Than the Token
Aave’s total value locked (TVL) decreased from $17.95 billion to $15.53 billion in DefiLlama’s daily UTC observations dated Oct. 17 and Nov. 14. That represents a decline of approximately 13.5%, which was smaller than the token’s fall over the roughly corresponding period.
TVL tracks the value of assets held in a protocol, rather than net deposits or borrowing demand. Under DefiLlama’s methodology, declining asset prices can reduce TVL even when users are depositing additional assets. As a result, Aave’s TVL decline should not be interpreted as an equivalent withdrawal of capital from the protocol.
LlamaRisk Proposes Aave V3 Collateral Changes
Governance discussions have also centered on reducing collateral risk within Aave. Risk adviser LlamaRisk proposed winding down $1.33 billion of collateral in Aave V3 Core, which backed $1.03 billion of debt as of Nov. 9.
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LlamaRisk argued that pooled borrowing rates expose suppliers to complex collateral without providing adequate compensation for the additional risks. As The Defiant previously reported, the proposed process would initially freeze the affected reserves, preventing new supply and borrowing against them while avoiding the immediate liquidation of existing loans.
Under the proposal, borrowers would be able to repay their loans, withdraw assets or migrate to other arrangements. LlamaRisk said the initial measures would be submitted as an onchain governance proposal after receiving approval.
Why This Matters
The comparison between $AAVE, Bitcoin and Ether highlights how individual crypto assets can experience materially different performance even during the same market period. Aave’s smaller TVL decline also shows why protocol activity and token price should be assessed separately: TVL can change because of asset-price movements and does not, by itself, prove that users have withdrawn capital.
The proposed Aave V3 Core changes could become the next significant governance step for managing collateral exposure. If approved and submitted onchain, the initial measures would restrict new activity involving the affected reserves while giving existing borrowers options to repay, withdraw or migrate.
Frequently Asked Questions
Did $AAVE lose more than Bitcoin and Ether?
Yes. The reported comparison shows that $AAVE underperformed both Bitcoin and Ether over the relevant period. It does not identify a specific cause for the additional losses.
How much did Aave’s total value locked decline?
Aave’s TVL fell from $17.95 billion to $15.53 billion between DefiLlama observations dated Oct. 17 and Nov. 14, a decrease of about 13.5%.
What did LlamaRisk propose?
LlamaRisk proposed winding down $1.33 billion of collateral in Aave V3 Core. The initial plan would freeze affected reserves without immediately liquidating existing loans, while allowing borrowers to repay, withdraw or migrate.
