Bank of Canada research: Aave V3 had zero bad debt last year, but borrowers bear most of the risk

Gate News update. On April 3, the Bank of Canada released a research report showing that Aave V3 on Ethereum recorded zero bad loans in 2024. Its total loan size was about $6 billion, utilization was 40%, and the net interest margin was 0.64%. The report notes that platform profits are highly concentrated: three assets—WETH, USDT, and USDC—accounted for about 83% of revenue.

The study is based on transaction data from January 27, 2023 to May 6, 2025. It found that overcollateralization and automated liquidation mechanisms effectively prevented lenders in Ethereum’s lending market from suffering losses. The report also notes that, while the model protects lenders, it shifts risk to borrowers and, compared with traditional loan systems, constrains capital efficiency.

In terms of user behavior, leveraged loop trading accounted for 20.46% of total borrowing volume and 8.2% of the number of borrowing transactions. Among leveraged traders, 58% were large investors. Liquidation activity shows strong clustering characteristics: four assets—WETH, wstETH, WBTC, and weETH—account for 90% of the total liquidation value. The aggregate loss to borrowers in major liquidation events (including liquidation fees and opportunity costs from missing the price rebound) is about 10% to 30% of the total liquidation amount. In addition, the research results show that liquidation activity has no significant sustained impact on market prices.