Recently, many people have been discussing AAVE's rebound strength. How should I put it? It's a bit disappointing. But looking closely at on-chain data reveals some interesting points.

From the perspective of the Ethereum mainnet, the ETH deposits on AAVE have already surpassed 3 million and are still pushing toward 4 million. Not only the deposit volume, but also the market share in lending, the proportion of active loans—AAVE is the absolute leader, holding roughly half of the DeFi lending space. With such strong on-chain performance, one would expect the price to see a significant increase.

But the reality is, the price just won't rise. Many people start asking questions, but the issue isn't with AAVE itself. Frankly, it's the overall environment that’s off.

DeFi as a sector inherently benefits from a bull market. When the market is bullish, TVL skyrockets, trading volume looks good, stories abound, and capital is naturally willing to assign higher valuations, pulling everything upward. Now? The opposite is happening in a bear market. Officially, they say deposits are hitting new highs every day, but the hidden truth is—overall TVL is still declining.

What does a drop in TVL indicate? It means funds are retreating. Capital flowing out, so it's no surprise that market cap isn't rising. This is a simple truth, nothing to hide.

Therefore, discussing the cost-effectiveness of DeFi during a bear market is inherently awkward. It's not that AAVE isn't excellent; it's that DeFi as a category, during bear markets, tends to have the lowest returns and relatively high risks. It's a fate that can't be avoided.

Additionally, competition within DeFi is indeed fierce. During bull markets, everyone makes friends and shares stories; in bear markets, things start to fall apart—teams leave, protocols suffer vulnerabilities, black swan events happen frequently, and anything can occur. This uncertainty naturally depresses the valuation of the entire sector.

AAVE is a good project, no doubt about that, but its business model is essentially tailored for bull markets. At this stage, it’s normal that the price can't move upward. In a bear market, DeFi finds it hard to become the priority for capital. Conversely, this also explains why MEME coins tend to rebound most strongly in bear markets—they have stories, speculative potential, and risk preferences that are the opposite.