Aave (AAVE), one of the leading decentralized finance (DeFi) platforms, recently faced a massive liquidation event, witnessing over $200 million in liquidations within just 24 hours. Despite this significant turmoil, Aave has showcased impressive resilience, maintaining a stable position in a highly volatile market. The key question is: how has AAVE managed to weather this storm?
~$200M liquidated on Aave in the past 24hrs, around about 70% of that being ETH / ETH deriv collateral pic.twitter.com/QpHc3HHUNS
— RđŽ (@Ren_gmi) February 3, 2025
Liquidation Breakdown and Network Health
The recent liquidation event, marking $205,443,590 in liquidations, was the highest since August 2024. This substantial drop accounted for around 30% of all liquidations on Aave to date. However, what stands out is the platformâs ability to avoid a sharp rise in bad debt. In fact, bad debt actually decreased during this period, indicating Aaveâs strong risk management protocols. This is a testament to the platform’s ability to handle market pressure while safeguarding its usersâ interests.
Despite concerns over the surge in liquidations, Aaveâs network remains robust, with a total value locked (TVL) of $18.3 billion. The decrease in bad debt highlights Aaveâs efficient collateral management, minimizing risk while maintaining liquidity. The platformâs stability through this challenging period further reinforces its position in the DeFi space.
Technical Analysis and Market Sentiment
Aaveâs price recently dropped 5.12%, landing at $259.34. The technical chart shows key support at $230, while resistance is pegged at $360. These levels suggest that AAVE could experience price fluctuations in the near term. However, with diagonal support emerging, there is potential for a recovery if the market stabilizes.
Investor sentiment remains split, but the bullish sentiment is slightly outweighing the bearish outlook. The presence of strong support levels offers hope for a price rebound. As long as Aave continues to manage collateral and debt risks effectively, a recovery in AAVEâs price seems likely.
Also Read: Over $200 Million in Liquidations on Aave (AAVE): Will Support Hold for a Price Recovery?
Aaveâs ability to navigate through the $200 million liquidation event with minimal disruption underscores the platformâs solid risk management and stability. As long as it maintains its effective collateral management and key support levels, AAVE may well see a price rebound, reinforcing its position in the DeFi ecosystem.
Disclaimer:Â The information in this article is for general purposes only and does not constitute financial advice. The authorâs views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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