Aave is struggling to attract daily new users; reasons aren’t surprising

• Aave has seen a decline in its user activity in the last 30 days.
• During that period, revenue increased as a result of a rise in fee charges.

Aave, the leading decentralized borrowing and lending protocol, recorded an average of 4,000 daily users in 2022, putting it ahead of its competitors, according to data from Delphi Digital.

.@AaveAave averaged ~4,000 daily active users in 2022. pic.twitter.com/iL4o4Mtr1j

— Delphi Digital (@Delphi_Digital) February 3, 2023

However, the year so far has been marked by a drop in user activity on the platform, per data retrieved from DappRadar. 

According to DappRadar, the number of unique active wallets (UAW) interacting with or performing a transaction on Aave has dropped by 31% in the last 30 days.

This was further confirmed by data from Token Terminal which showed that on a 30-day average, Aave saw a daily count of 3,800 users, representing a 38% decline in the daily user count of the protocol. 

How much are 1,10,100 AAVEs worth today?

As user activity dropped, the transaction count fell as well. In the last month, the number of transactions completed on Aave decreased by 42.49%. Within that period, the transaction count on the protocol totaled 38,000. 

This decline seriously impacted transactions volume on the protocol as data from DappRadar revealed a 96% drop in the fiat value of transactions completed on Aave in the past 30 days. 

Source: DappRadar

V3 deployment on Ethereum sees a drop in daily transaction count

Aave successfully launched its V3 iteration on the Ethereum network on 27 January, following the support of its community. The new deployment has generated substantial interest, with $60.26 million in deposits and $28.29 million in loans being recorded.

Data from Dune analytics revealed that the number of unique daily users of the V3 deployment on Ethereum had climbed steadily since it launched. In the last week, this grew by over 500%.

Source: Dune Analytics

However, daily transactions completed amongst these users embarked on a decline a day after V3 went live on Ethereum. Peaking at 134 transactions on 28 January, daily transactions on Aave V3 on Ethereum have since fallen by 85%.

Source: Dune Analytics

Read Aave’s [AAVE] Price Prediction 2023-2024

Here comes the silver lining

Despite the persistent drop in user activity and transactions on Aave in the last month, revenue made by the protocol grew by 17%. 

Aave generates revenue by charging fees on its platform for various activities, such as borrowing and depositing funds, and by earning interest on the funds deposited into the platform.

Per data from Token Terminal, cumulative fees made on Aave totaled $5.3 million, rising by over 200% in the past 30 days.

Source: Token Terminal