Aave's price has dropped over 10%, but on-chain data and profitability are sending strong bullish signals.

Despite the overall pressure on the crypto market recently, the price of Aave (AAVE) has fallen more than 10% in a short period. However, from the perspective of fundamentals and on-chain data, the long-term resilience of the protocol remains solid. Data shows that while prices are pulling back, Aave's volume surged to about $577 million, with a daily rise of over 200%, reflecting a significant increase in market speculation.

Previously, a crypto whale sold approximately $17 million worth of AAVE, triggering a chain reaction in the derivatives market. Long perpetual contracts faced concentrated liquidation, with the liquidation scale rising to about $1.59 million, further exacerbating short-term price volatility. However, the short-term selling pressure did not change the true flow of funds on-chain.

According to DeFiLlama data, since December 18, the total value locked (TVL) in Aave has actually increased by about $1.42 billion. In the context of market sentiment leaning towards panic, large-scale funds continue to flow into decentralized lending protocols, which is often seen as a strong recognition of the long-term prospects of the project. The choice of investors to lock assets in Aave, rather than switch to stablecoins or sell off directly, indicates that the market still has confidence in its earning potential and risk-reward structure.

From an income perspective, Aave's fundamentals are equally impressive. In the past 24 hours, the protocol generated approximately $1.88 million in fees, with a total of $11.58 million in fees over the past week, demonstrating a stable and healthy user usage rate. More importantly, Aave achieved approximately $22.56 million in quarterly net income in the fourth quarter of 2025, setting a new historical record and highlighting its core position in the DeFi lending space.

In addition, the net income of token holders has remained positive this quarter to date, at approximately $7.11 million. Although lower than the previous two quarters, it remains profitable during the price pullback phase, further strengthening the logic of holding AAVE long-term.

It is important to note that on-chain activity has cooled down in the short term. Artemis data shows a temporary decline in the number of transactions and active addresses. However, while the activity slows down, the TVL continues to rise, which may indicate that short-term traders are gradually exiting, leaving behind stronger long-term capital. Once market sentiment warms up, this portion of waiting capital may flow back in.

Overall, AAVE's short-term price trend is more influenced by whale sell-offs and derivatives liquidations rather than a deterioration in fundamentals. Record protocol revenue, continuously growing TVL, and stable fee income still provide solid support for Aave. For investors focusing on decentralized lending, AAVE's long-term value, and DeFi fundamentals, the current data resembles a structural opportunity amidst volatility rather than a trend reversal signal.