Aave Loses DeFi TVL Due To V3 Contract Split But PancakeSwap and Stargate Crash Hard

CryptoMode NFT Marketplaces Revenue Decline PancakeSwap

DeFi enthusiasts may be surprised to see the TVL in Aave drop down by a fair bit. That isn’t too surprising, as a new protocol version is now being tracked. However, the loss by PancakeSwap seems to have a very different reason. 

Aave Isn’t Losing TVL Per Se

When opening the DeFiLlama website, it quickly becomes apparent there is a massive TVL outflow for Aave. That is always worrisome, especially given Aave’s position in decentralized finance. People tend to get twitchy when a major protocol loses nearly 10% of its TVL in a week. However, although the market conditions are bearish, they are not severe enough to warrant such an outflow.

Following this decline, Aave’s TVL is on the cusp of dropping below $12 billion. More specifically, that is how it would seem to people who don’t scroll down a bit further. There is now a new version of Aave – Aave V3 – which the DeFi aggregator is tracking. It has a new smart contract address, separating it from the “primary entry”.

That Aave V3 version has gained $1.4 billion in TVL over the past few days. It is virtually the same amount of Total Value Locked the main Aave contract has lost this week, further confirming a switch between contracts. The new version represents $1.33 billion on Avalanche, and much smaller amounts across Optimism, Harmony, Polygon, Arbitrum, and Fantom. 

In essence, nothing has changed for Aave’s position in the DeFi TVL rankings except its contracts getting split up. It is somewhat similar to how Uniswap V2 and V3 exist. It is unclear if DeFiLlama will merge these contracts into one “Aave” banner again in the future. However, the protocol has not lost any Total Value Locked. The rankings have become a bit confusing, but everything is above board with the prominent DeFi protocol.

PancakeSwap and Stargate Are Losing Ground

The situation is very different for PancakeSwap. As the leading AMM DEX on the BNB Chain, seeing the protocol note a weekly loss of over 13% is problematic. However, this is not unexpected, as the monthly TVL trend for PancakeSwap now sits at -17.12%. People continue to pull liquidity out of this protocol, although the reasoning remains unclear. 

Numbers-wise, PancakeSwap now has a TVL of under $5.7 billion. It is the lowest level since late January 2022. Again, the crypto markets have not been bullish for long and continue their overall downward trend. That may be a contributing factor, although it is unlikely to be the only reason. For now, there is no reason to panic, although it is a situation worth paying attention to. 

A similar situation affect Stargate, a cross-chain DeFi protocol. The project has lost over 25.7% of its TVL in a week. Like PancakeSwap, it has an even worse monthly trend at -46.44%. Despite a strong initial run-up, it seems Stargate has lost significant momentum. Ethereum remains its biggest chain for TVL, following by BNB Chain and Avalanche. 

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