As of January 2026, the active loan volume in the on-chain lending ecosystem of Ethereum has surpassed $28 billion, setting a new record. Token Terminal data shows that compared to the lows at the beginning of 2023, this metric has increased more than tenfold. Among them, Aave accounts for approximately 70% of the market share, becoming the core engine supporting the entire Ethereum DeFi lending system, and also giving the network a significant advantage in scale over competing blockchains like Solana and Base.
The continuous expansion of lending activity reflects that DeFi is being adopted by more institutions and long-term users. By Q3 2025, the total cryptocurrency lending volume had risen to $73.6 billion, a 38.5% quarter-over-quarter increase. Analyst Kobeissi pointed out that the approval of Bitcoin ETFs and industry recovery have driven a rapid rebound in on-chain financial demand. However, the rising concentration of lending also means that in extreme market conditions, automated liquidations could be amplified.
This risk was put to the test during a weekend in late January 2026. At that time, Bitcoin rapidly dropped from about $84,000 to below $76,000. Due to weekend liquidity shortages, tensions in the Middle East, and uncertainties around US government funding, the total global leveraged position liquidations exceeded $2.2 billion within 24 hours. Aave completed over $140 million in automated liquidations across multiple networks. Even when Ethereum Gas fees soared above 400 gwei, there was no system crash or bad debt.
If this core protocol fails, undercollateralized loans could quickly accumulate, triggering a chain reaction. Fortunately, Aave’s stable operation prevented the spread of risk. Platforms like Compound, Morpho, and Spark also participated in absorbing liquidation pressure, but still cannot fully replace in scale and automation. Major holders like Trend Research also sold some ETH to repay loans, leveraging the Aave mechanism to reduce leverage.
This incident demonstrates that while Ethereum’s lending system is expanding, it is also gradually maturing. Although the AAVE token dropped over 6% in the past 24 hours, Aave’s performance in extreme conditions has reinforced its position as a “DeFi stabilizer” in turbulent markets.
Disclaimer: The information on this page may come from third parties and does not represent the views or opinions of Gate. The content displayed on this page is for reference only and does not constitute any financial, investment, or legal advice. Gate does not guarantee the accuracy or completeness of the information and shall not be liable for any losses arising from the use of this information. Virtual asset investments carry high risks and are subject to significant price volatility. You may lose all of your invested principal. Please fully understand the relevant risks and make prudent decisions based on your own financial situation and risk tolerance. For details, please refer to
Disclaimer.
Related Articles
The Ethereum Foundation teamed up with Biconomy to launch ERC-8211: AI agents can handle multiple DeFi contract interactions in a single transaction
The Ethereum Foundation and Biconomy have teamed up to launch the ERC-8211 standard, enabling AI agents to dynamically execute multi-step DeFi actions within a single signed transaction, determining parameters in real time based on on-chain state and overcoming the static limitations of ERC-4337. This standard does not require a fork at the protocol layer, making it easier for developers to adopt and further accelerating the integration of AI and DeFi automation.
動區BlockTempo1h ago
SUI Will Overtake Ethereum: Mysten Labs Co-Founder Makes Bold Call
A bold statement from Mysten Labs has pushed Sui back into the spotlight, especially as the conversation around scalability and real-world crypto payments continues to evolve. The claim centers on one idea. Future financial systems will demand fast and near-free transactions, and that
CaptainAltcoin3h ago
Bitmine Acquires 71,252 ETH, Nears 4% of Ethereum Supply With Massive Holdings
Bitmine has accumulated 4.8M ETH, nearly 4% of the supply, while expanding staking operations to generate up to $282M annually. With $11.4B in total holdings, the firm plans to list on the NYSE, solidifying its status as a leading Ethereum holder.
CryptoFrontNews5h ago
BlackRock charges an 18% commission on staking rewards for its Ethereum staking ETF; multiple experts assess costs and risks
BlackRock’s iShares Staked Ethereum Trust launched in March under its brand, with a management fee of 0.25% and a staking-reward commission of 18%. Industry insiders believe the commission includes multiple costs, and it may decrease in the future. Some people question whether such a high fee is justified, especially when comparing it to staking rates for retail investors.
GateNews7h ago
Ethereum falls below $2,200, with the 24-hour gain narrowing to 6.1%
Gate News update, April 8, market data shows that Ethereum fell below the $2,200 mark, and the 24-hour gain narrowed to 6.1%.
GateNews8h ago
ETH drops 0.85% in 15 minutes: ETF inflows weaken and large holders cut positions, triggering spot selling pressure
2026-04-08 14:30 to 14:45 (UTC), the ETH spot market saw a rapid pullback, with the return rate recording -0.85%. The candlestick price range fluctuated between 2202.51 and 2227.59 USDT, with a swing amplitude of 1.13%. During this period, trading volume rose by about 10% versus the previous hour on a quarter-hour basis, short-term market volatility intensified, and mainstream investor attention noticeably increased.
The main driving force behind this unusual move is that the ETF capital inflow momentum, which was strong on April 6, significantly weakened on April 8; institutions and some of the capital that had flowed in earlier chose to realize profits in the spot market, bringing concentrated selling.
GateNews8h ago
