Grayscale Turns Bullish on AAVE, Sees +139% Upside as V4 Deposits Hit Record High

Digital management firm Grayscale shared its bullish view on DeFi lending token AAVE. They projected that it could reach a value of $175 within the next year.

This new outlook on the token came as its parent platform continues to expand its utility in decentralized finance. For context, its newly launched Aave V4 protocol hit a new record of over $175 million in deposits. This shows that its user activity is still growing despite the current bear market.

AAVE was valued by the firm using methods more commonly used to evaluate assets like stocks. This includes analysis of its earnings and cash flow.

Grayscale sees strong upside for AAVE

In its new research report, Grayscale projected that the Aave protocol could generate around $60 million in net income by 2026. Based on that forecast, the asset manager noted that the token currently has a fair value between $80 and $100.

The firm took a step further to outline an even more optimistic scenario. The firm said if regulators provide clear rules for digital assets and more real-world assets move to blockchain networks, the altcoin could reach a value of around $175 over the next 12 months.

“In a base case scenario in which regulatory clarity accelerates adoption of tokenized assets, we believe AAVE token fair value could rise to $175 in one year,” Grayscale said in its report.

Source: Grayscale

It was also highlighted by the firm that the platform differs from many other crypto projects. This is because it generates measurable revenue through its lending activity. AAVE benefits from fees earned when users borrow assets on the protocol.

Source: Grayscale

According to the firm, protocol revenue increased more than six times between 2023 and 2025. Its operating margins are also estimated to be around 50%.

Aave V4 crosses $175M in deposits

The protocol’s V4 platform, which launched in March this year, recently passed $175 million in deposits. This suggests that liquidity and user participation are still strong after months of the upgrade.

This new version of the protocol was made to support institutional lending and tokenized assets while still maintaining its shared liquidity in different markets.

Notably, Grayscale shared in the report that they expect an increase in capital for tokenized real-world assets in the coming years. They also said that when more of these assets enter the DeFi space, lending platforms like Aave could see more deposits and borrowing activity.

For context, deposits of real-world assets on Aave-related products crossed $1 billion earlier in the year. This shows the growing interest from institutional investors.

Meanwhile, despite its positive projection, Grayscale tried to balance the scales. They acknowledged that there are still risks that could affect the token’s performance. There is still tough competition within the DeFi lending sector, and regulatory clarity has not exactly been established in the crypto industry. 

Recent ecosystem issues have also reduced user engagement. Right after the Kelp DAO rsETH incident earlier in the year, the protocol experienced lower activity, and token buybacks still remain paused while governance reviews continue.