The price of Aave has dropped over 82% from its peak, and an ecosystem contributor has revealed the current operational status in a lengthy article

Author: ACI (Aave Chan Initiative)

Compiled by: Jiahua, ChainCatcher

ACI is an 8-person team. Since March 2023, the DAO has paid us $4.625 million. We began working pro bono four months prior to that. Below are the results we have delivered.

The DAO is currently discussing a single funding request that exceeds the total amount paid to all other service providers. Before token holders vote on any service provider's budget, they have the right to know what return they can expect for every dollar spent. Each service provider should publish a report like this one. ACI leads by example and is the first to publish.

All data below comes from TokenLogic's public dashboard, DefiLlama, the Aave governance forum, or on-chain data. There is nothing here that requires blind trust. Please verify independently.

Core Achievements

For every dollar paid to ACI, there has been a $29 increase in protocol revenue. We do not take all the credit—BGD maintains the codebase, Chaos Labs manages risk, TokenLogic handles treasury, data analysis, and leads BD and institutional trading, and the market environment is equally important. But someone has to turn infrastructure into revenue. That is our job.

In 2025, $101 million in incentive funds was deployed, with $80 million coming from external partners who chose Aave because they recognized ACI's infrastructure and network relationships. GHO grew 15 times to reach $527 million. The AAVE buyback program has officially launched. Without a dedicated growth team, our closest competitors generate only a fraction of Aave's revenue.

Revenue: From $5.2 Million to $142 Million

Source: TokenLogic Revenue Dashboard.¹ TokenLogic built and maintains the data infrastructure that makes this transparency possible.

Rolling 365-day revenue: $142.9 million (as of February 13, 2026)

We started as pro bono contributors in November 2022 and began receiving paid compensation in March 2023. Since then, the protocol's annual revenue has grown from $5.2 million to $141.8 million.

V3 launched in January 2023. During this time, BGD continuously delivered protocol upgrades, but the core lending architecture remained unchanged. The 27-fold revenue increase was not due to a rebuild of the protocol—V3 was already live. What truly changed was what was built on top of it: which assets were launched, which chains were deployed, which partners brought in funding, what incentives were optimized, and which governance proposals were passed. That is what we do.

It operates on top of the Aave V3 and eMode architecture built and maintained by BGD. We drove over 48% of the revenue through two major strategies designed and executed via more than 75 governance proposals.

LRT / eMode Engine

In February 2024, Gauntlet pointed out that the borrowing volume of WETH was $1.1 billion, generating a $3.87 million annual reserve factor income, with borrowing "primarily collateralized by WETH LST." We saw this opportunity and built a revenue machine around it.

We introduced weETH (February 2024), rsETH (May 2024), and ezETH (August 2024) to Aave, then configured eMode for ETH-related trading pairs with a 93% LTV (loan-to-value ratio) for capital-efficient circular borrowing: deposit LRT, borrow wETH, exchange for LRT, and repeat. Each cycle generates borrowing interest for the DAO.

This is a simplified version. The actual design includes more layers. LRT holders borrow wstETH. wstETH holders borrow wETH. Demand is established throughout the tech stack rather than having all LRT compete for the same wETH pool. LRT borrowing boosts the capital utilization of wstETH, which in turn raises the deposit rate of wstETH. Higher deposit rates attract more wstETH deposits. More deposits deepen the wETH borrowing pool. Each layer feeds back into the next, allowing users and the DAO to earn more at every step.

On-chain data shows that there is currently a total of $247.8 million in wstETH borrowed across the Core and Lido markets, with wstETH holders carrying $1.27 billion in WETH debt (22.5% of all WETH borrowings), while LRT / LST collateral drives a total of 97.6% of WETH borrowing demand.

We increased the reserve factor of LRT to capture revenue at every step. We controlled access: EtherFi gained eMode access to wETH to maintain high capital utilization. Lido received a dedicated instance (TEMP CHECK: Deploy a Lido Aave V3 Instance, passed with 7.027 million votes), with its own market and growth trajectory. This maintained a good relationship with Lido and created millions in independent revenue. The WETH capital utilization on this instance often exceeds 90%.

Morpho cannot replicate this. On Aave, collateral can earn deposit interest within the lending pool—LRT depositors earn re-staking rewards plus lending pool deposit APY. On Morpho, collateral is idle. There are no deposit earnings, no compounding. This circular structure has a higher profit margin on Aave. We identified this gap early on, built around it, captured over 85% of the asset class's share, and converted it into over $37 million in annual WETH revenue.

Key parameter decisions: We raised the reserve factor of weETH from 15% to 45% (ARFC: Updating weETH Risk Parameters), doubling the DAO's revenue capture on the fastest-growing collateral asset on Aave.

WETH is the largest single revenue-generating asset on Aave, with 2025 revenue of $37 million (28% of total protocol revenue). weETH is the second-largest asset by deposit volume in Aave's Ethereum market ($4.47 billion). ETH-related assets account for 43.6% of all Ethereum V3 deposits.

In ETH terms, the engine is still growing. Borrowing volume increased from about 2.55 million ETH to 2.86 million ETH (+12%). The decline in dollar value reflects the drop in ETH price (from $3,800 to $2,051), not a failure of the strategy.

Direct scans of holders (as of February 16, 2026, there are 2,704 WETH borrowers) confirm the circular logic at the wallet level. Just weETH holders account for 57.9% of all WETH borrowings: generating $3.27 billion in debt, bringing in $18.9 million in reserve factor (RF) income per year. If expanded to all LRT introduced by ACI (weETH, rsETH, ezETH, osETH, ETHx, tETH), this proportion rises to 75.1% of total WETH debt ($24.4 million per year). Including wstETH, this proportion reaches 97.6%. Almost all WETH borrowing demand on Aave can be traced back to the LRT / LST tech stack we built. These LRT holders also borrowed $707 million in stablecoins, generating an additional $3.9 million in RF income annually.

ACI has drafted over 35 governance proposals related to the launch of LRT on Ethereum, Arbitrum, Base, Scroll, Sonic, and Avalanche, as well as eMode configurations and parameter optimizations.

Ethena / Pendle Flywheel

Ethena / USDe was once the core growth narrative for Morpho. We flipped it, turning it into Aave's revenue engine.

Starting in March 2024, we successively launched sUSDe, followed by USDe, eUSDe, and Pendle principal tokens (PT) covering multiple maturity batches. The strategy is as follows: use PT as collateral (obtaining a high LTV of 91-94% through eMode) to borrow stablecoins, exchange for USDe, re-stake, and repeat the process.

When USDe launched, we set its reserve factor at 25% (ARFC: Onboard USDe to Aave V3 on Ethereum). This ratio is high enough to capture considerable income from billions in borrowing, yet low enough to maintain competitive borrowing rates compared to Morpho.

The launch of Pendle PT (TEMP CHECK: Onboard Pendle PT Tokens to Aave V3 Core Instance) was a game-changing move. The TEMP CHECK phase passed with a 69% approval rate. After controversy and debate, it was ultimately approved in the ARFC phase with 99.99% support. We strongly pushed a strategy that was initially controversial, which ultimately became one of the largest sources of revenue on Aave.

Ethena-related assets (USDe, sUSDe, eUSDe, and Pendle PT tokens) generated $12.7 million in direct revenue in 2025. Ethena collateral holders also borrowed $1.58 billion in USDC and USDT against their positions, generating an additional $5.8 million in reserve factor income annually. At its peak, over 50% of USDe-related assets in DeFi were held on Aave.

Aave captured 85% of the Ethena / Pendle lending market. Morpho captured 13%, but generated zero protocol revenue from it. We designed competitive eMode parameters, better liquidity depth, and reserve factors that could capture value for the DAO.

Holder attribution analysis (as of February 16, 2026, there are 2,672 Ethena / Pendle holders) confirms the $1.58 billion in stablecoin borrowings ($1.02 billion USDT, $555 million USDC, $6.5 million GHO), generating $5.68 million in RF income annually, with a deviation of less than 2% from the estimated $5.8 million. sUSDe, eUSDe, and Pendle PT tokens serve only as collateral (zero direct borrowing income); their value lies in the borrowing demand they create. The direct borrowing income scan for USDe on Ethereum ($3.8 million) and Plasma ($2.8 million) networks amounts to $6.6 million annually.

Comprehensive Impact

On-chain verification (February 16, 2026; V3 pool reads + cross 16 chains, 22 markets, 254 assets holder attribution):

All four are confirmed on-chain. The gap between TokenLogic's full-year data and the on-chain snapshot reflects changes in the interest rate environment (mid-2025 ETH price was $3,800, now $2,051, and lower GHO borrowing rates), not a decline in business volume. WETH: 97.6% of borrowings come from LRT / LST holders. Ethena stablecoin borrowings: 896 borrowers, $1.58 billion in debt, confirmed deviation within 2%. GHO supply reached an all-time high across 9 chains ($527 million). By any measure, the strategies designed by ACI drove over 48% of the protocol's revenue.

In addition to these strategies, at current interest rates, assets introduced by ACI can generate $9.3 million in direct protocol revenue annually ($1.6 million RLUSD, $400,000 USDG, $300,000 USDtb, $250,000 EURC, $100,000 cbBTC, etc.). The chains deployed by ACI (Plasma, Ink, Sonic) collectively generate $6.8 million in annual revenue.

Ethena collateral holders (sUSDe, USDe, eUSDe, and Pendle PT depositors) borrowed $1.58 billion in stablecoins: $555 million USDC and $1.02 billion USDT. This accounts for 20.6% of all USDC borrowings and 28.8% of all USDT borrowings on the Aave V3 Ethereum network. The reserve factor income generated from these borrowings ($5.8 million annually) is directly attributable to the Ethena strategy: without the collateral launches and eMode configurations we designed, this borrowing demand would not exist on Aave. The LRT cycle also drives stablecoin borrowing demand not included in this 48% lower bound metric, pushing the actual numbers higher.

Revenue by Chain

The accelerating growth trajectory of Plasma is detailed below.

Revenue by Asset (2025)

On-chain verification: V3 pool scan confirms, at current interest rates, WETH annual revenue is $33 million (the difference from $37 million = ETH price drop, not reduced activity; borrowing volume in ETH terms grew by 12%).

The Story of Plasma

Plasma is the clearest single case. We drove its deployment through Skywards, managing a $7.7 million incentive program (WXPL + USDT0 + ETHFI), resulting in $2.3 billion in TVL and $3 million in revenue within six months. Annualized at the current 30-day run rate: $6.5 million. On-chain scans (February 16, 2026) independently confirm $5.9 million in annual revenue, accounting for 7.5% of total V3 protocol revenue. The Plasma airdrop received by the DAO was also coordinated through us.

Nothing is Eternal

As market conditions change and PT batches mature, Ethena's asset scale has shrunk from $6.8 billion to $2.35 billion. The LRT engine will eventually mature as well. The decline of the revenue engine is faster than the delivery of protocol upgrades. As the next engine is built, someone must be responsible for operating the current engine.

Since Ethena peaked, we have launched or are actively guiding the next generation of revenue-generating assets through governance: Syrup (syrupUSDT, syrupUSDC), USDG, Strata srUSDe PT tokens, frxUSD, USDai / sUSDai, and stAVAX. This cycle is continuous: discovering opportunities, building solutions, optimizing parameters, and then seeking the next opportunity.

Operations and Infrastructure

Revenue strategies are only half the work. The other half is keeping the machine running—governance, incentives, partnerships, and infrastructure. Every major initiative requires the cooperation of the entire SP (service provider) ecosystem: we draft proposals, coordinate risk control with Chaos Labs and LlamaRisk, implement with BGD, and guide proposals through TEMP CHECK, ARFC, AIP, and on-chain execution. The final outcome depends on every team in that chain.

Governance

During the same period, the second-largest entity receiving DAO funds submitted 28 proposals on-chain. Nearly half were about its own budget or products.

Governance is a collective effort. BGD contributes technical upgrade proposals, Chaos Labs contributes risk parameter updates, and community members increasingly participate through Skywards. Our core focuses on strategy, asset launches, chain deployments, incentive mechanisms, and structural reforms.

The Dolce Vita initiative reduced the average first response time for governance forum topics from 300 hours to 48 hours. The speed increased sixfold. When managing $27 billion in TVL, waiting an extra day for parameter updates can cost real money.

Orbit maintained a representative participation rate of over 80% throughout 2025. A salute to every representative who attended and voted throughout 2025: thank you. Without actively participating representatives, proposals cannot reach quorum, and governance will stagnate.

Incentive Deployment

We managed a total of $101 million in incentive deployments in 2025: $21.2 million from the DAO treasury and $80 million from external partners. Both were deployed through on-chain liquidity mining and our Merit system.

Deposit Activities (2025 Year):

Total deposit activities funded by the DAO: budget of $6.5 million, net TVL growth of $339 million.

Borrowing Activities (2025 Year):

Total borrowing activities: budget of $2.7 million, net TVL growth of $168 million (growth rate of 109%).

sGHO activities (budget of $12 million) increased staked GHO from $122 million to $265 million (+117%), supporting the stability and adoption of the GHO peg.

On the partner side, Merit-as-a-Service (MASIv) attracted $80 million in externally funded activities through the Merit / Merkl infrastructure, bringing a peak TVL growth of $5.55 billion. The largest was Ripple's $8.5 million RLUSD deposit activity, increasing TVL from $4.9 million to $382.8 million (+7,707%). These initiatives were funded by external partners (Ripple, Ethena, Plasma, Stader, etc.), not the DAO treasury. They required our infrastructure and network relationships, combined with TokenLogic's data analysis and BD work for execution.

Not every activity met its targets. USDS saw a decline in TVL. Sonic USDC dropped by 17%. We cut both projects and reallocated funds to activities with better unit economics rather than struggling with losing positions. When partner activities underperform, the DAO bears no financial downside risk—this is the essence of MASIv.

We showcase these missteps because we have the confidence to do so. USDS underperformed, so we cut spending and reallocated to activities with better unit economics. Sonic USDC declined, so we withdrew the budget instead of chasing losing positions. When historical performance is so strong, showcasing failures actually underscores the value of success.

Asset Launch and Business Development (BD)

Skywards helps major protocols navigate Aave governance for asset launches. In 2025, it facilitated over 15 major proposals, including chain deployments (Sonic, Ink, Plasma, MegaETH), asset launches (RLUSD, EURC, USDtb, ggAVAX, ETHx, cbBTC), Chainlink SVR integration, HyperLend friendly fork recognition, SP compensation reform, and the AAVE buyback program. Every asset launched through Skywards brings a continuous stream of revenue to the DAO. Just the launch of RLUSD has already generated revenue in a market with over $600 million in TVL.

Every item can be verified through on-chain data or public governance records.

The Ethereum Foundation deposited 30,800 ETH (approximately $82 million at the time) into Aave as part of its 50K ETH DeFi strategy. On-chain confirmation (address 0x9fC3dc011b461664c835F2527fffb1169b3C213e, February 16, 2026): a total of 31,405 ETH supplied in Core ($42 million) and Lido ($20.2 million) markets, and borrowed $2.07 million in GHO. This position deepened Aave's WETH liquidity to $62 million, providing additional borrowing capacity for the LRT / eMode cycle engine. Throughout the process, we maintained a direct business relationship with the Ethereum Foundation. The scale of institutional funds like this does not come by chance. Aave's risk control framework provides security. The business relationship opened the door.

Strategic Leadership

Aavenomics (Aave Economics). We drafted and executed comprehensive reforms: a $50 million AAVE buyback program (now live), activating the fee switch directing protocol revenue to the DAO, and coordinating the redesign of the Umbrella security module. The buyback program is the largest structural change in AAVE token economics since the migration from LEND.

GHO: From $35 million to $527 million. The growth of GHO is the result of our collaborative efforts with TokenLogic. We designed the sGHO staking framework, managed the incentive program ($12 million in 2025), and drove cross-chain expansion to Base and Avalanche. TokenLogic is responsible for managing GHO peg stability, borrowing rate calibration, GSM operations, liquidity committee execution, and building the data analysis infrastructure that informs every decision. Neither team could have achieved these results alone.

Grew 15 times. GHO generated $12.7 million in protocol revenue in 2025, making it the fourth-largest revenue source by asset ranking. Outstanding GHO remains at an all-time high ($527 million). Aave Labs has now promoted it as a key product on the Aave interface.

SP Compensation Reform. We drafted the framework that currently governs how all service providers are compensated, applying it first to ourselves. Prior to the reform, we had never requested compensation in AAVE tokens.

Multi-chain Strategy. We proposed and executed a multi-chain-focused strategy, rationalizing underperforming V3 deployments and concentrating DAO resources on chains that generate substantial revenue.

Market Share

When our third phase began (April 2024), Aave's share of the active lending market in DeFi was below 50%. By the end of 2024, that share reached 71.2%. As of February 2026, Aave holds a 64.7% share of active lending in DeFi (accounting for $17.2 billion of a total of $26.6 billion in active loans across top lending protocols).

Maintaining a 65% share in a market where competition intensifies every quarter is an achievement in itself. Without a dedicated growth service provider, Compound currently has a TVL of $1.2 billion and generates approximately $26 million in annual revenue. Morpho, with substantial venture capital backing, generates zero protocol revenue. The same asset class, the same market. The difference lies in execution.

The fourth phase, "Path to 80," aims to achieve an 80% market share through incentive optimization, new chain deployments, and MASIv partnerships.

Cost Accounting

For context, here are the existing annual costs for each entity receiving DAO funds:

Source: Latest governance proposals from each SP on the Aave governance forum.

The total cost of the entire service provider ecosystem is approximately $30.5 million per year, while generating $142.9 million in protocol revenue. ACI's cost is $3 million—10%—covering growth, incentives, partnerships, and governance execution.

What would happen to Aave without ACI?

This is a reasonable question. Token holders should ask this question of every service provider.

Without us:

• No incentive management. The $101 million in activities (DAO + partner funding) would not have been designed, deployed, or optimized. Every competitor is running their own incentive programs. Without our incentive mechanisms, Aave's TVL growth would stagnate, and competitors would close the gap.

• No LRT revenue engine. The circular engine generating $37 million annually would not be built. weETH would not be launched. The reserve factor would not be optimized. WETH borrowing would remain at $1.1 billion instead of $5.87 billion.

• Unable to capture Ethena funds. At its peak, Aave had $6.8 billion. Without us, these funds would flow to Morpho, which generates zero protocol revenue from it.

• No Skywards channel. Asset launches would rely on individual proposers navigating the governance process alone. The launches of RLUSD, EURC, USDe, and dozens of other assets would be delayed or might not happen at all.

• No GHO growth engine. The sGHO framework, cross-chain expansion, and $12 million in targeted incentives are part of our collaborative efforts with TokenLogic. Without our half, the growth engine would stall.

• No MASIv partnerships. Without a team to manage these relationships, the $80 million in external partner funding would not flow into Aave.

• No governance throughput. Losing 61% of governance actions (845 Snapshots and AIPs) since ACI's establishment and hundreds of forum replies. Without these, governance would bottleneck, and the protocol would fail to adapt to market conditions.

• No cross-SP coordination. Asset launches, chain deployments, and economic reforms require coordination between risk control, technology, treasury, and governance teams. Without someone to drive these processes, proposals would stagnate, partner funds would be delayed, and opportunities would be missed. They might not even be discovered at all.

• No Plasma. $2.3 billion in TVL and $5.9 million in annual revenue, directly attributable to our deployment coordination and incentive management.

Execution is not a one-time event. Revenue engines will decline. If the next strategy is not ready in the pipeline, growth will reverse.

Conclusion

Since November 2022, we have spent a total of $4.625 million of Aave DAO funds. The protocol's annual revenue has grown from $5.2 million to $141.8 million. The share of active lending market has surged from below 50% to over 65%. GHO has grown from $35 million to $527 million. At the current 30-day run rate (annualized at $218.8 million), the protocol would earn back our entire compensation in just about a week. For every dollar of revenue growth, ACI's cost to the DAO is only 3.4 cents.

Ask any entity using DAO funds three questions:

1. What have you delivered? Provide verifiable on-chain evidence, along with the governance infrastructure, coordination work, and partnerships that produced these results.

2. What is the cost? Full disclosure of total compensation.

3. What is the return? Revenue generated, TVL created, governance output.

Our answers are as shown above.

The DAO is currently evaluating a $51 million funding request from Aave Labs—which exceeds the total of all other service providers. Before voting, token holders should ask the same three questions. This is the result of $4.625 million delivered over three years, with on-chain evidence. Please apply the same standards to the $51 million request.