I want to share an honest review of Aave along with a realistic price prediction, because I see some critical problems here and I want you to make great crypto investments. To me, this looks like an awful crypto investment. There's no way I would buy this, and I'm going to walk through exactly why. I've researched thousands of altcoins, and I've been in crypto for 11 years, so this comes from my own experience looking at these projects.
The holder count and the speculation problem
The first problem I see is that this is an Ethereum token with only 182,000 holders. To put that in perspective, the fully diluted market cap on this is $3.4 billion. If you put $3.4 billion into the calculator and divide it by 182,000 holders, that comes out to about $18,000 per holder. That's a lot of money riding on every single wallet that is holding the token.
The next big problem is that Aave is a lending protocol that calls itself decentralized, but in my view it's not actually decentralized. You cannot interact with Aave without going through some centralized third party like the Aave website, and that website is hosted right back on centralized tech. As we've seen with Bybit getting hacked for billions of dollars, if you've got your website on centralized tech and you don't have the entire application fully on the blockchain, your application is not truly or even meaningfully decentralized.
What real decentralization would look like
The only way I believe you can build a truly decentralized website right now is to use the Internet Computer. If Aave was built completely on the Internet Computer, and if it was hosted with a Service Nervous System DAO, then you could have the token and everything on the blockchain. The token would then have real ownership and real voting power. But since this is built on Ethereum, the reality as I see it is that this is just a token that is completely speculative. It's basically like a meme coin, where the token has no legal ownership over any of the Aave protocol and no ownership enforced by code. You're totally reliant upon the development team to do what you ask them to do, because this is built on Ethereum. You don't have the capacity you have on the Internet Computer Protocol, where when you make a proposal it can automatically execute and update the entire blockchain.
So for as high as this is valued on the price chart right now, at billions of dollars, I see a token with no fundamental value backing the people who are holding it. My real question is, what can you actually do with the token? If you hold it, you can get a discount on lending and borrowing. But lending and borrowing is not something people are loyal to. When somebody else comes along with a better lending and borrowing protocol, like what's being built on the Internet Computer where you can borrow against neurons and do it all on a blockchain, everybody exits Aave very easily and moves over to the new platform.
Why I don't trust the TVL numbers
Metrics like TVL are also extremely easy to fake. When I talked to Kyle Langham from DFINITY, he told me they could make the TVL whatever they wanted it to be. So when people are all hyped up about the TVL, that number is very easily faked. What's not so easily faked is looking at how the governance actually works. If you go into the FAQ, you can vote if you have Aave, staked Aave, or Aave on the Ethereum V3 market. But how do you actually vote? You have to go through the governance contracts.
When you look at how the governance process works, first you post on the forum, and this whole part of the process appears to be very centralized to me. Then you make a vote on the chain, which is on Ethereum, so you have to pay gas just to vote. This tech is so bad compared to ICP, where you vote instantly and it's executed fully on-chain. And even with the on-chain voting on Aave, you're still totally reliant on Aave Labs to go through and make the actual changes to the smart contracts.
Bridges, competition, and a bleak future
If you look at their recent posts, they're celebrating millions of users and all these different chains. What I see is a lot of stuff that can go wrong, because Aave is bridged over to these other chains. Those bridges are all centralized, and if one of them on any of those chains gets hacked, the whole protocol could drain. And if anyone builds a competitor, like what's being built on the Internet Computer Protocol, that is faster and cheaper and actually has governance on-chain, Aave's dead.
So to me the future looks bleak for this, because I don't see how much this is likely to go up. If you look at the transactions, they're only now, after years, getting back close to where they were four years ago when this released. This had almost nothing happening during the bear market. For years the transactions were just dead. Now, with people speculating and trading and doing a few more loans, there's a little bit more activity, but you only have a few thousand transfers a day. On the Internet Computer, you have that many transactions every second. On Solana, you have about that many transactions every couple of seconds. The actual amount the token is getting used on the blockchain, which to me is the foundation of what gives something value, has been poor for a long time. We're seeing a little uptick now, but still nothing like the bull market. The number of unique senders is much further down than it was in a bull market.
The team and the pace of change
Another big problem is the Aave leadership. Based on what's posted on third-party websites, there are only four people I can even see on the Aave team. You have a founder, a CFO, a CCO, and a chief communications officer. Are some of these the same person? I don't know. Where are the engineers working on the protocol? Ultimately, this token looks to me like it's totally based on marketing and hype, with almost no meaningful technology behind it. How the Aave protocol works is easily copied to all kinds of other chains and all kinds of lending protocols, which means there's practically infinite competition for this.
And yet you've got people hyping up proposals. I don't see anything exciting here. Look at the Aavenomics implementation. The community approved it in August 2024, and the pace is shockingly slow. It's taking forever to upgrade when you're used to the Internet Computer, where things move fast. On ICP, you can make a proposal and it can execute and upgrade the actual network within a day or so. On Aave you're taking a whole year to make relatively small changes to the protocol, and then it rallies and people get hyped on that. This looks horrible to me. I don't see any reason to buy this or any reason to hold it.
The only scenario where I'd consider holding it
The only reason I would even consider this token for my portfolio is if I personally was using the Aave protocol every single day. If I was doing lots of lending and borrowing on it, which I don't think is a great thing to do in the first place, then it might be worth considering holding the token. But even then, the token is relatively useless in terms of actual utility, because all it does is give you a slightly lower rate and then practically meaningless governance.
So in my opinion this is going to trend toward zero. I believe it will easily get wiped out and won't last the test of time. It has barely limped through its first bear market. Going forward, when the tech is so much further advanced on ICP, I think this becomes irrelevant. The best chance it even has to survive would be to migrate the token to ICP, put the protocol all on there, and get everything secured. If it did that, I'd be bullish on it. But other than that, under no circumstances besides using it every single day would I hold this. I see no reason to speculate on it.
And consider how far the gains could realistically go anyway. This already has the same market cap as the best technology in crypto. If you're holding this hoping it's going to go up, how high is it actually going to go? It's a lending protocol token that's already at a $3 billion fully diluted valuation. I've got a lot more thoughts like this if you want to think through your whole portfolio, and you can find them in my Money playlist. If you'd like to chat, you can join OpenChat and actually use the ICP blockchain completely for free.