"Liquidity mining" and "Layer2 deployment" boost! Aave's total locked assets surpass 20 billion US dollars milestone

According to official data, the total locked assets in the protocol deployed by Aave doubled again in less than a month, reaching the milestone of $20 billion. Decisions on liquidity mining and the deployment on Layer 2 may be the main reasons for Aave's significant growth.

Aave TVL Surpasses $20 Billion

According to data provided by decentralized lending platform Aave, the total value locked (TVL) in Aave, when all deployed protocols are combined, has reached $21.3 billion, doubling in less than a month. Of this, the TVL of AAVE v2 protocol deployed on Ethereum accounts for $12.6 billion.

Liquidity Mining Decisions Effective

The rapid growth of Aave's TVL is mainly attributed to the launch of the "liquidity mining program" and the deployment on the Polygon Layer 2. As reported earlier, Aave announced the initiation of liquidity mining at the end of June to provide users with more earnings and adoption incentives. Since then, Aave's TVL has significantly increased, more than tripling during a period that saw a major cryptocurrency market correction.

According to data from Dune Analytics, Aave's independent user count compared to the two mainstream lending platforms Maker and Compound continues to rise, and during market downturns, only Aave has maintained an upward trend.

Additionally, the total value of loans on the Aave platform surpassed Maker and Compound in May, indicating a substantial increase in platform adoption and the effectiveness of the liquidity mining decisions.

Layer 2 Strategy Sets Trend

Achieving a milestone of $20 billion in TVL, besides the impressive performance of Aave v2 on Ethereum, the rapid growth of the forked version deployed on the Layer 2 network Polygon also played a significant role. Data shows that the total locked assets of Aave on Polygon reached $7.8 billion within just six weeks of launch, ranking it fourth even when compared with other projects on Ethereum. Aave's success has led to more DeFi projects transitioning to Polygon.

As early as the beginning of April, before Aave's official deployment on Polygon, Aave's integration lead Marc Zeller predicted a gradual transition of Ethereum's DeFi ecosystem to a multi-chain ecosystem with Ethereum serving as the underlying settlement layer. We are now witnessing the rise of more Layer 2 or side chain solutions.

For instance, the highly discussed Layer 2 solution Arbitrum, which launched its mainnet beta on May 28, received over 200 DeFi protocols applying for testing. Uniswap and Sushiswap, two major DEXs, have officially announced their deployment on the network through community voting. The governance proposal for Uniswap was submitted by the founder of Compound, with the largest number of supporters being the founder of Synthetix. Hence, there is a high probability that these two major DeFi protocols will enter the Arbitrum network.