AAVE’s fair value could climb to around $175 within the next year if clearer regulations accelerate the adoption of tokenized real-world assets (RWAs), according to a new report from Grayscale Research.

The firm estimates AAVE’s current fair value at between $80 and $100, while the token is currently trading near $73.

Massive Upside for AAVE

Grayscale stated that Aave’s position as the leading decentralized lending protocol, in addition to growing stablecoin usage and the tokenization of traditional financial assets, creates a favorable setup for future growth. Aave operates similarly to a digital lending platform, which allows users to deposit crypto assets, earn yield, and borrow against collateral through smart contracts rather than traditional intermediaries.

As of the report, the broader DeFi ecosystem holds more than $59 billion in deposits and $25 billion in outstanding loans. Aave controls a significant share of that activity. The protocol serves nearly 200,000 monthly users and generates revenue primarily through lending spreads, treasury earnings, and income from GHO, its native overcollateralized stablecoin.

Aave’s financial performance has strengthened considerably in recent years, Grayscale said. Between 2023 and 2025, the protocol’s revenue increased more than sixfold, while profitability stayed strong at about 50%. The report added that Aave’s DAO treasury has at times held more than $360 million, providing a sizeable pool of capital that can be used for expansion plans and other community-approved initiatives.

An important part of Grayscale’s bullish outlook focuses on Aave’s institutional expansion plans, particularly Horizon, a dedicated market that would allow institutions to use tokenized real-world assets as collateral for accessing DeFi liquidity. The firm believes that regulatory clarity around digital assets and tokenized securities could significantly boost adoption of these products, driving loan growth and increasing protocol revenues.

Additional catalysts include the continued expansion of GHO, the rollout of the Umbrella safety module, the upcoming V4 protocol architecture, and the launch of a simplified Aave App that aims to attract mainstream users. Grayscale’s valuation framework indicates that Aave’s current market price implies relatively modest long-term earnings growth despite strong sector tailwinds. Uncertainty around regulations remains one of the main reasons AAVE trades at a discount compared with fintech firms that have similar lending and revenue-generating characteristics.

UK FCA Approval

Last month, Aave Labs announced that its UK-based subsidiaries, Push Labs Ltd. and Push Virtual Assets Ltd., received registration from the UK Financial Conduct Authority (FCA) to operate as crypto asset exchange providers. The approval also allows the companies to issue electronic money under the UK’s Electronic Money Regulations 2011.

According to the company, the registrations pave the way for regulated crypto services and payments infrastructure, including stablecoin on- and off-ramp solutions. Founder Stani Kulechov said the approvals will allow users to move traditional fiat currency directly into the Aave ecosystem through a zero-fee on-ramp. He added that the FCA approvals form part of Aave’s wider regulatory push across Europe, which includes a MiCA license in Ireland.

Source: CryptoPotato