Aave, the decentralised lending protocol, has hit a new milestone with $30.5 billion in active loans, accounting for nearly two-thirds of the total decentralised finance (DeFi) lending market. The surge further solidifies Aave’s position as the leading DeFi protocol, both in active loans and total value locked (TVL).

Aave Takes the Lead in DeFi Lending

On 18 September, Aave’s active loans reached $30.5 billion, representing 65% of the $46.72 billion total across all DeFi lending protocols, according to Token Terminal data. Its closest competitor, Morpho, holds under $5 billion, leaving Aave with a commanding lead.

Beyond lending activity, Aave also boasts a TVL of $42 billion, based on figures from DefiLlama. This makes it the largest DeFi protocol by deposits. In traditional banking terms, Aave’s deposit base would place it as the 53rd-largest commercial bank in the United States, ranking among the top 2.5% of all American banks based on June regulatory filings.

Fees and Revenue Highlight Growth

Aave’s growth is not only evident in loan volumes but also in the revenue it generates. Over the past seven days, the protocol collected $24.6 million in fees, ranking as the fifth-largest crypto protocol when factoring in stablecoin issuers Tether and Circle.

Among purely decentralised projects, Aave ranks third, behind Pump.fun and Uniswap. This demonstrates the protocol’s ability to compete with both centralised and decentralised players in terms of revenue generation.

Why Users Choose Aave

Aave serves multiple purposes beyond traditional lending and borrowing. Traders often use the platform as a liquidity source to access leverage, borrowing against their existing holdings to expand positions fully on-chain. Meanwhile, passive holders deposit idle assets to earn yields and investors turn to Aave in search of returns beyond what conventional banks offer.

These varied use cases have fuelled the protocol’s consistent expansion and made it an integral part of DeFi infrastructure.

Yield Advantage Over Traditional Banks

One of Aave’s strongest attractions lies in the yields it offers compared to traditional finance. According to Aaverank, USDC deposits on Base currently earn 5.76% APY, dwarfing the 0.39% average yield from FDIC-insured banks in the US.

Similar premiums exist across multiple networks. On Ethereum, USDC yields 5.12%, while Avalanche offers 5.03%. For USDT, Aave delivers 5.09% on Ethereum and 3.94% on Linea. These consistently higher rates highlight why DeFi platforms like Aave continue to draw significant capital from investors seeking competitive returns.

Looking Ahead

Aave’s record-breaking loan activity underscores the growing demand for decentralised financial services that provide both yield and leverage. With a strong TVL, dominant market share and consistent fee generation, Aave has cemented itself as a cornerstone of DeFi.

As yields remain significantly higher than those in traditional finance, Aave is likely to continue attracting users who are seeking more efficient and rewarding ways to manage capital. The protocol’s growth reflects a broader trend: DeFi lending is no longer a niche alternative but a serious competitor to traditional banking systems.