Aave Token Drops 25% Monthly Amid DeFi Sell-Off

AAVE, the native token of the decentralized lending platform Aave, is currently trading around $85.20, showing a slight intraday rebound but remaining in a broader bearish trend. Over the past week, the token has dropped more than 8%, with a monthly decline exceeding 25%, reflecting persistent sell-side pressure in the DeFi sector. While it has bounced off its recent low near $76, AAVE is still trading significantly below its all-time high of $666 set in 2021.

Aave continues to push forward with major upgrades, with Aave V4 now live on testnet. This version introduces substantial improvements in gas efficiency, privacy layers, and a modular governance framework known as Portals. Discussions are ongoing within the DAO about deploying a staking-based security model, aimed at reinforcing the platform’s risk mitigation protocols. These developments are fueling ongoing debates about the security model of the DAO.

Aave has also been actively promoting its native GHO stablecoin, which is now available on Ethereum, Polygon, and other networks. Although initial adoption was slow, recent governance proposals include liquidity incentives, integration partnerships, and wallet UI improvements. These measures could help drive demand for GHO and subsequently benefit AAVE’s token utility. The expansion of GHO on these networks, along with governance incentivizing liquidity and UI upgrades, is aimed at boosting token demand and utility.

From a technical standpoint, AAVE is currently trading at the bottom of a descending channel structure that has persisted since April. Early bullish divergence in RSI suggests potential accumulation. However, a sustained trend reversal would only be confirmed with a strong breakout above the $96–$100 resistance zone. If successful, price targets extend toward $130–$150, which are historically significant levels. Conversely, a breakdown below $75 could send AAVE toward $60, a level not tested since late 2022.

Despite its current challenges, Aave remains the backbone of decentralized lending. However, it faces increasing competition from Layer 2-native platforms and new DeFi architectures. The success of GHO adoption and the rollout of Aave V4 will be critical to reestablish bullish momentum. The integration of AI governance in Cookie DAO and Aave GHO's stablecoin design showcases the innovative synergy between DeFi and AI in 2025. The 12K+ participation in Cookie Snaps highlights growing community engagement.