Gray research: AAVE is severely undervalued, with a fair value outlook of $175 within one year

Grayscale (Grayscale) Research Report Indicates AAVE Token Currently Undervalued at $75, Potential Fair Value Could Reach $175 Within a Year; DeFi Protocols Have Generated Nearly $25 Billion in Fees Since 2023, Transitioning from Pure Commodity to Real Income Asset Class.
(Background recap: Circle Ventures announced the purchase of $AAVE to support "DeFi United," causing AAVE to rise 3.6% in the short term)
(Additional context: Is Aave planning to initiate a token buyback? Community proposal: weekly purchases of $1 million for six months to optimize staking rewards)

Grayscale's research department released a new report on June 18th stating that the current fair value of the AAVE token is undervalued by the market, with an expected rise to about $175 within a year, representing over 130% upside from the current price of around $75. Grayscale categorizes crypto assets along a spectrum from pure commodities to cash flow-driven assets, with AAVE, UNI, and SKY closer to the latter—assets capable of generating real cash flows.

The report notes that decentralized finance (DeFi) protocols have accumulated nearly $25 billion in protocol fees since 2023, indicating that DeFi is no longer just a speculative tool but is becoming an asset class capable of producing real income. Grayscale believes the market may not fully understand the profound impact this shift has on token value.

Aave Protocol Revenue Grows Over 6.6 Times in Three Years

The Grayscale report emphasizes that Aave's revenue has increased more than 6.6 times over the past three years, with an operating profit margin of about 50%, demonstrating a sustainable business model. The report's model forecasts that Aave will earn approximately $60 million in protocol revenue by 2026.

Using a traditional financial technology company's P/E ratio of 20 to 25, Grayscale estimates Aave's current fair market value to be between $1.2 billion and $1.5 billion, corresponding to a token price of about $80 to $100—already higher than the current trading price of $75.

Optimistic Scenario: Clearer Regulations Drive Adoption of Tokenized Assets

Grayscale further points out that if regulatory clarity accelerates and promotes large-scale adoption of tokenized real-world assets (RWA), AAVE's fair value could reach $175 within a year. This suggests that, amid the integration of DeFi and traditional finance, Aave, as one of the largest lending protocols, could benefit first.

Additionally, Grayscale reminds the market that value accumulation in DeFi often occurs through mechanisms like token burns, buybacks, rebates, and staking. Protocol revenue alone is not sufficient to directly determine the final token value—tokenomics design and governance decisions also play a crucial role.