Aave protocol is not affected by market Fluctuation and soared 21%

With the market reset, the encryption lending protocol Aave has restarted in a bullish trend. The platform's eponymous Token AAVE surged nearly 20% in the past 24 hours, capturing the momentum of the broader market, and has continued to pump by over 5% since yesterday. Aave's recent developments have also driven this rebound. However, the broader encryption financial market may not agree with the current performance of the platform.
In the second quarter, there were some cracks in the lending part of the Decentralized Finance (DeFi) sector. According to research in the second quarter, over 31.87 billion dollars of TVL was specifically used for lending, marking a significant decrease in the share of Decentralized Finance. However, the TVL of the main functions of Decentralized Finance (such as stake, lending, and cross-chain bridges) saw a significant decrease, totaling over 8 billion dollars.
The value of leaving these industries is returning in the form of restaking or basic trading protocols on other platforms, which has caused a rise of 154% in TVL in the second quarter. The decrease in lending activities has also affected the assets on the platform. It is revealed that most of the wallets holding collateral on Aave belong to medium to high risk.
If the market drops by 25%, most Wallets will suffer losses, which means liquidation. This indicates that lending on Decentralized Finance is still risky, especially in the current market fluctuation experienced this week.
AAVE is currently trading between $93 and $102. Despite the significant decline from June's price level, it still provides a strong support for a potential breakout in the near future. However, due to its independent trend from the market, the current bullish momentum may just be a brief squeeze or a sudden pump before a sharp decline.
In the current market environment reflecting this volatility, AAVE will have a hard time maintaining its June price level and may further decline.
(Data Source: Christian Encila)