Aave's DeFi Ascendancy: Record TVL and Ethereum Ecosystem Strength

Aave has seen Total Value Locked (TVL) surge to all-time highs and demonstrate higher resilience in the Ethereum DeFi ecosystem. In mid-May 2025, Aave's TVL remained over $40 billion, the record-high TVL of any DeFi protocol, with Aave v3 accounting virtually all of this due to higher capital efficiency and cross-chain compatibility. This achievement reflects increased investor confidence and increased user activity.

This increase in TVL is driven by increasing deposits, better market conditions, and optimism for Ethereum, persuading users to lend Aave for yield-generating purposes. Aave is earning over $1 million in fees per day and has an outstanding debt of around $10 billion, indicating a good utilization rate of around 33%. Big traders ("whales") are also arriving with coming in and assuming borrowing positions through massive deposits, predicting a bullish future for ETH. Despite short-term price volatility for AAVE tokens, Aave's recent triumph and TVL expansion are proof of its continued reign and innovation in DeFi lending, paving the way for a new DeFi boom

Whale Watching: Mixed Strategies and Market Impact on AAVE

Whale activity regarding Aave (AAVE) shows contradictory strategies: one whale, "jez," sold 10,000 AAVE tokens and some other Ethereum-denominated holdings to buy Bitcoin, and in doing so potentially placed downward price pressure. Other whales, however, were bullish, such as depositing 3,196 ETH into Aave V3 and borrowing $4 million USDT, as a demonstration of faith in the protocol without selling ETH. Furthermore, enormous OTC AAVE buying valued at over $15 million in mid-April has spurred price rallies, with giant borrowing and deposit activity propelling Aave's TVL to over $25 billion, showing strong investor confidence and continued bullish appetite by giant holders

Currently, AAVEUSD has showed a massive rally after forming a temporary bottom. It is trading below both the short-term (34 and 55 EMA) and long-term moving averages. The price recently reached a low of $176 and is trading around $194.92.

Technical Analysis Insights: From a technical analysis perspective, the bearish threshold is set at a close below $100, which would indicate a potential invalidation of bullish sentiment. On the downside, immediate support is identified around $175, with further levels at $150 and $125 if downward pressure continues. Conversely, near-term resistance is positioned near $280; a breach above this level may suggest minor bullish momentum. It could reach targets of $305/$340/$400.