Try Quests to earn cryptoDeposit & Borrow on Aave - Deep Dive
What is This All About?🚨
> ## Welcome to my Aave Protocol deep-dive dashboard!
Aave is a decentralized finance (DeFi) platform built on the Ethereum blockchain that allows users to borrow and lend a variety of cryptocurrencies without intermediaries. With Aave, users can earn interest on their deposited funds or borrow funds at variable or fixed interest rates, depending on their preferences. In this dashboard, we will explore the ins and outs of borrowing and depositing on the Aave Protocol, including how it works, borrowing rates, and some key considerations to keep in mind. Let's dive in!
Analyzed Topics:
- Overall & Over Time Statistics
- Top 10 Most Deposited and Borrowed Tokens
- Popular Stablecoins VS Other Tokens
- Stable and Variable Borrow Rates
Introduction🚩
What is Borrowing?
Borrowing is a temporary possession of money with the intent to repay the amount borrowed. In a financial sense, if you borrow money, you assume a debt to the lender, this debt contains the principal amount plus interest.
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What is Depositing?
Users can earn passive income on Aave by depositing assets into the protocol. Deposited assets are lent out to borrowers at a variable or stable interest loans. The interest collected from borrowers is redistributed to depositors minus protocol fees.
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What is Stable and Variable Borrow Rates?
Stable rates act as a fixed rate in the short-term, but can be re-balanced in the long-term in response to changes in market conditions. The variable rate is the rate based on the offer and demand in Aave.
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Method⚡
In this dashboard, i analyzed Aave protocol deposit and borrow activity in past 90 days and deep dived through its borrowing rates and explore most popular tokens in this platform.
For this matter, i extracted the data from ==Ethereum.Aave== database provided by Flipsidecrypto and set the timeframe for past 90 days. I mainly used ez_deposits and ez_borrows tables to gather the data and combine them together.
You can change the timeframe to your desirable timeframe from the Date field above but before that, you should log in to flipside.
Findings👀
- Based on the above charts, daily borrows and deposits were bearish in the past 90 days, but there was no significant movement in the USD volume chart during this period. After a minor decrease in early December 2022, deposit and borrow activity began to increase at the start of the new year, coinciding with an increase in the price of the $AAVE token.
- Overall, the Aave protocol recorded a higher amount of deposits than borrows in the past 90 days, with the highest USD volume on Aave, most of which came from deposits, occurring on February 13th, with over $1.1 billion in volume. Users generated a total of $12.6B in volume on deposits and approximately $6B on borrows in the past 90 days, with the number of deposits being double that of borrows.
- Recently, There have been significant fluctuations in the average volume on Aave, with the largest spikes occurring on February 13th and 18th.
Findings👀
- Based on the charts above, it appears that WETH and USDC were the two most frequently deposited tokens on Aave, with WETH accounting for over 10K deposits and $6.9B in total volume, and USDC accounting for over 6.5K deposits and $2.5B in total volume.
- Given that USDC is consistently ranked in the top two on all of the charts, it's safe to say that it is the most popular token among Aave users.
- As for borrowing, it seems that USDT is the most commonly borrowed token, with over $2.3B in volume, followed closely by USDC with $2.2B.
- Interestingly, while USDC had more borrows (7.1K) than USDT in the past 90 days (4.5K), USDT had a higher borrowed volume.
Findings👀
- In this section, I presented data on deposit and borrow activities on the Aave protocol, excluding stablecoins such as USDT, USDC, and DAI from all tokens, and then compared their respective recordings.
- Regarding deposit activity, we can observe that the majority of the deposit activity on Aave in the past 90 days has been with other tokens, while stablecoins accounted for nearly 30% of the deposit share in both the deposit count and volume cases.
- However, on the borrow side, stablecoins made up over 70% of the pie charts.
- It appears that users are primarily depositing other tokens in order to borrow stablecoins.
Findings👀
- Few days before 2023, variable rate had so many fluctuations and they were not moving the same, but after start of new year, stable and variable rate started to move closely and also, variable rate went under stable rate.
- Overall, there were much more borrows has been recorded on Variable rate than stable rate in past 90 days while on most days stable rate was more than variable rate.
- Totally, almost 6.2B borrow volume has been recorded on variable rate while stable recorded only 114M during this period.
- Last 2 tables are showing top 50 tokens with most and least borrow rates. As we observe, $AAVE token (Aave protocol native token) and stETH have 0 borrow rates, means that they don’t have any stable or variable borrow rates. On the other hand, FEI stablecoin has the highest borrow rate among all tokens with 774K borrow rate followed by renFIL in the second place with over 443K borrow rate in total.
- FEI variable borrow rate is 12K more than its stable borrow rate and for renFIL, it doesn’t have any stable borrow rate and the 443K is just variable.
Conclusion💡
- After generating some buzz at the start of the new year, deposit and borrow activity on Aave declined and returned to pre-2023 levels.
- The highest USD volume for both deposits and borrows on Aave in the past 90 days was recorded on February 13th, totaling over $1.1B.
- During this period, more deposits were recorded than borrows in both the number of transactions and total volume.
- WETH was the most frequently deposited token in the past 90 days, followed by USDC in second place. On the borrow side, USDT and USDC led other tokens with the highest borrow activity.
- It appears that Aave users tended to deposit non-stablecoins while borrowing stablecoins more frequently.
- The variable borrowing rate on Aave dipped below the stable rate in late December, and both rates continued to decrease together.
- Variable rate borrowing is much more common on Aave than stable rate borrowing.
- $AAVE and $stETH have the lowest borrowing rates of all tokens on the Aave protocol with 0, while FEI stablecoin and renFIL token have the highest borrowing rates.
