Aave News Today: Aave Handles $180M Crash Test as Institutions Double Down on DeFi

A suspected Multicoin Capital address received 210,000 Aave (AAVE) tokens in a recent transaction routed through Galaxy Digital's over-the-counter (OTC) wallet, according to on-chain analytics. The move highlights the growing intersection between institutional crypto players and decentralized finance (DeFi) protocols, even amid heightened market volatility.

The transaction, first reported by COINOTAG, occurred as Galaxy Digital-listed as NASDAQ: GLXY-continued to leverage Aave's decentralized liquidity infrastructure for institutional-grade capital management. Galaxy's strategy includes borrowing stablecoins against blue-chip collateral like BTC and ETH, as outlined in its partnership blog with AaveGalaxy Digital Withdraws 10,750 ETH from Binance Amidst AAVE…^[3]. The firm also utilizes Aave's native stablecoin, GHO, to optimize treasury liquidity and generate yield through its Savings GHO (sGHO) product.

The timing of the Aave transaction coincides with a significant stress test for the DeFi protocol. On Oct. 11, 2025, Aave's native token, AAVE, plummeted 64% during a crypto flash crash before rebounding 140% from its low. Despite the turmoil, the Aave protocol processed $180 million in automated collateral liquidations within an hour, demonstrating its resilience under extreme conditionsAAVE Price News: 64% Flash Crash as DeFi Protocol…^[1]. Stani Kulechov, Aave's founder, called the event the "largest stress test" for the protocol's $75 billion lending infrastructure.

The flash crash underscored Aave's role in the evolving DeFi ecosystem. The protocol's ability to handle massive liquidations without human intervention reinforced its credibility among institutional players like Galaxy. "Aave has proven to be a highly reliable platform for accessing liquidity," said Max Bareiss, Head of Lending at Galaxy TradingGalaxy Digital Withdraws 10,750 ETH from Binance Amidst AAVE…^[3].

Market analysts are closely watching Aave's price trajectory in the aftermath. While the token stabilized near $240 in consolidation trading, its 30-day volatility remains elevated, with a 64% swing in a 24-hour periodAAVE Price News: 64% Flash Crash as DeFi Protocol…^[1]. Price prediction models offer a mixed outlook. CoinCodex forecasts a 16.52% rise to $300.12 by Nov. 13, 2025, while CoinPedia projects a 2025 high of $526 and a 2030 peak of $1,161. Conversely, bearish scenarios caution that Aave could dip to $234 in 2025 if market sentiment deteriorates.

The recent transaction also reflects broader trends in institutional DeFi adoption. Galaxy's use of Aave aligns with its strategy to reduce reliance on centralized counterparties and access 24/7 liquidityGalaxy Digital Withdraws 10,750 ETH from Binance Amidst AAVE…^[3]. The firm's withdrawal of 10,750 ETH (worth $28.19 million) from Binance further illustrates the shifting dynamics of institutional capital management, as firms diversify their exposure across both centralized and decentralized platforms.

Aave's V4 upgrade, set for late 2025, could further solidify its position in the market. The update introduces "Liquidity Hubs," which aim to pool liquidity across chains and reduce capital inefficiencies. If successful, the upgrade may attract more institutional participation, bolstering Aave's total value locked (TVL) of $34.9 billion.

However, regulatory uncertainties and competition from DeFi 2.0 projects pose challenges. The GENIUS Act, which restricts stablecoin interest payments, could limit Aave's revenue streams from real-world assets (RWAs). Meanwhile, platforms like EigenLayer and Solana's DAT-driven protocols are vying for a share of the DeFi liquidity pool.

For now, Aave's recent performance and institutional backing suggest it remains a cornerstone of the DeFi lending sector. As Galaxy and others continue to integrate Aave into their operations, the protocol's ability to navigate regulatory and market headwinds will be critical to its long-term success.

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