Grayscale Research published a report on April 8 arguing that the AAVE governance token is undervalued relative to the protocol’s dominance in decentralized finance. The firm pegs fair value between $80 and $100, with a projected upside to roughly $175 over a one-year horizon.
AAVE was trading near $90 at the time of the report’s release, placing it squarely within the estimated fair-value band. The $175 target represents nearly a 95% premium from current levels.
The case for Aave’s dominance
Aave controls approximately 48% of all on-chain lending activity, according to DeFiLlama data cited in the report. The report, led by Grayscale’s head of research Zach Pandl, draws a direct comparison between Aave and traditional banks. Aave outperforms legacy financial institutions on operational costs, a finding that Grayscale notes is reinforced by research from the Bank of Canada.
Pandl’s team also highlights Aave’s token value accrual mechanism, which involves burning AAVE tokens using revenue generated from lending activity. Fewer tokens in circulation, same or growing demand, and the math tends to work in holders’ favor over time.
