AAVE price surged nearly 19% within a single day, driven by excitement around the protocol’s debut on Aptos and broader market optimism following dovish signals from the Federal Reserve.

What Is AAVE and Why It Matters

Aave is a widely used protocol in decentralized finance (DeFi), allowing users to lend and borrow cryptocurrencies without relying on centralized intermediaries. With smart contracts handling transactions, borrowers must provide high collateral levels to secure loans.

The AAVE token is essential to this ecosystem. It is used for staking, governance, and even as collateral. Tokenholders benefit from voting rights and fee reductions, positioning AAVE at the center of protocol development and upkeep.

Aptos Integration Marks a Major Milestone

On August 21, Aave Labs revealed that Aave V3 had officially launched on Aptos, its first move to a blockchain outside of the Ethereum Virtual Machine (EVM) ecosystem. This required a total rewrite of the codebase into Aptos’ Move language, along with a redesigned interface to run within the Aptos Virtual Machine.

The deployment came after rigorous smart contract audits and a mainnet security competition. Post-launch, Aave introduced markets for assets like APT, sUSDe, USDT, and USDC. Risk policies are being gradually adjusted, and oversight is being provided by Chaos Labs and Llama Risk. Real-time pricing comes via Chainlink oracles.

Aave Labs CEO Stani Kulechov referred to this as a groundbreaking transition, ending their five-year EVM exclusivity with a major leap into cross-chain capabilities.

Powell’s Dovish Comments Boost Market Confidence

Federal Reserve Chair Jerome Powell’s recent speech at the Jackson Hole Symposium further pushed crypto prices upward, including AAVE. Powell suggested a more cautious stance moving forward, saying the balance between inflation and employment risks had shifted. This was interpreted as a green light for potential rate cuts as early as September.

Following these comments, interest rate cut expectations rose noticeably. According to CME FedWatch, the probability of a quarter-point rate cut in September climbed to 83%, up from 75% earlier in the week. Shared market enthusiasm contributed to a broader rally in equities and crypto—AAVE among the top performers.

World Liberty Financial (WLFI) Exposure Re-Emerges

Another overlooked catalyst behind AAVE’s rally is its relationship with World Liberty Financial (WLFI). Back in October 2024, WLFI proposed creating its own instance of Aave V3 on Ethereum’s mainnet. As part of that arrangement, AaveDAO was awarded 20% of WLFI’s protocol fees and 7% of its governance tokens.

On August 23, Delphi Digital analyst Simon highlighted that WLFI’s token would commence trading on September 1 with an estimated $27.3 billion valuation. Aave’s stake could thus be worth approximately $1.9 billion—over one-third of its current $5 billion fully diluted valuation. Investors may only now be appreciating the impact of this exposure, contributing to renewed buying interest.

Related: Ethereum Supply on RLUSD Reaches $1.26B

Technical Analysis Underscores Momentum

• Data from CoinDesk Research indicates that AAVE rose from $297.75 to $353.22 between August 22 at 12:00 UTC and August 23 at 11:00 UTC, amounting to an 18.65% gain that aligns with its expansionary milestones.
• Price action occurred within a $62.11 range, peaking at $356.60. A high-volume surge happened at 14:00 UTC on August 22, with trade volume soaring to 340,907 units — well above the 102,554-unit daily average.
• Final-hour gains were especially noteworthy, as the token moved from $349.61 to $353.79 between 10:49 UTC and 11:48 UTC on August 23.
• High liquidity levels were consistently recorded at key trading points like $352.55, $353.98, and $355.52. These levels surpassed the session average, indicating institutional buying activity.

AAVE has outperformed top cryptocurrencies following its strategic expansion and strong investor sentiment.