Aave founder Stani Kulechov announced on July 30 that the lending protocol plans to retire dozens of low-use asset reserves and wind down deployments on six blockchain networks, affecting $98.1 million in supplied assets and $15.6 million in outstanding debt. The proposal would remove 50 individual reserves, retire 21 matured Pendle principal tokens and close 25 reserves across Sonic, Scroll, zkSync, Metis, Soneium and Aptos networks. As reported by crypto.news, the changes cover approximately $98.1 million in supplied assets and $15.6 million in debt, though the measures require DAO approval before full implementation. The protocol would initially freeze affected reserves and reduce supply and borrowing caps to one unit, with existing positions remaining open but new deposits and borrowing prohibited.
The consolidation is driven by economic viability concerns, as each of the six deployments now generates less than $5,000 per quarter in revenue. According to the latest proposal, Metis, Soneium and Aptos bring in under $1,000 each, while Aave's Ethereum mainnet generates more than $142 million annually and Base generates about $4.7 million. The six chains together account for less than 1% of Aave's roughly $14 billion in total value locked across 23 chains. The protocol's own share of a $5,000 quarterly revenue is approximately few hundred dollars, making these deployments economically marginal. Aave's borrowers paid about $888 million in interest over the past year, but the protocol kept only roughly $117 million, or about 13 cents of every dollar collected.
The six complete deployments hold $12.8 million in combined supply and $4.1 million in debt, with Sonic being the largest at $7.6 million supplied and $2.7 million borrowed. According to crypto.news analysis, Sonic deposits have fallen 74% over six months, while Scroll deposits declined 86% to $2.2 million and zkSync fell 88% to $844,000. Metis and Soneium dropped to $297,000 and $173,000 respectively, and Aptos liquidity fell 94% over six months, leaving $1.7 million supplied and $719,000 borrowed. LlamaRisk concluded these deployments generated too little revenue to cover the cost of maintaining price feeds, monitoring systems and operational support, reflecting the risk provider's assessment that remains subject to governance review.
AAVE demonstrates more nuanced whale behavior with recent accumulation in futures markets despite the protocol's major consolidation plans. According to Blockchain.news analysis, open interest in AAVE futures increased 2.51% over 24 hours despite a 4.35% price drop, indicating smart money is accumulating long exposure into weakness. The taker buy/sell ratio of 1.22 confirms aggressive buy-side flow dominating real-time order execution, while retail traders remain 57% long and top traders/whales at 58.4% long - essentially the same positioning. This unusual alignment between smart and retail money suggests institutional confidence in AAVE's near-term prospects, with the funding rate at 0.0079% remaining nearly neutral, indicating no impending liquidation cascade.
The protocol consolidation marks a retreat from Aave's earlier push to deploy broadly across emerging networks, with the DAO previously expanding to Linea after receiving approval. As reported by crypto.news, Aave remains the largest decentralized lending protocol with about $14.5 billion in total value locked across 23 chains, while the protocol concentrates resources on Aave V4, institutional markets and higher-use deployments. The largest affected positions include FBTC and eBTC wrappers on Ethereum, which hold about $16.3 million in supply but only around $63,000 in borrowing. Once positions have largely unwound, Aave plans to replace live price feeds with fixed-price oracles before completely retiring the six markets, with the exact implementation schedule depending on community feedback and voting results. The proposal represents the logical conclusion of Aave's new direction set out in December, when the Aave Chan Initiative proposed rolling back deployments on zkSync, Metis and Soneium as having "proven to lack product market fit," and pushed a rule requiring any future deployment to commit to at least $2 million in annual revenue.
AAVE's technical indicators now show firm selling pressure after oscillating between $88 and $100 for most of July. According to AMBCrypto analysis, the token declined 11.2% within 48 hours following Friday's high of $101.57, with Coinalyze data showing a 5% drop in Open Interest and Spot CVD declining over recent days. The Funding Rates had been negative in recent days, showing heightened willingness among market participants to go short, but have since flipped toward positive territory. The swing structure on the 1-day chart was bearish, with the downward continuation confirmed when the previous swing low at $85.05 was breached and a new low at $57.83 was set. The CMF was below the -0.05 line showing strong capital outflows, and the A/D indicator was declining since April, with further losses appearing likely if the $88 demand zone is ceded to the bears.
