Aave governance and the stablecoin market outlook
Aave DAO revenue hit $140 million in 2025, while the stablecoin market reached a $309 billion supply in mid-October 2026. Compound v3 is tightening liquidity on Ethereum Comets by reducing supply caps on dormant assets to combat exploit frequency.
Aave DAO revenue reached $140 million in 2025, which exceeded the combined total of the previous three years. The community debates whether CoW Swap fees from the new interface reach the DAO treasury or flow to an address controlled by Aave Labs. An Aave Orbit delegate estimates that approximately 10 percent of potential revenue from this service misses the DAO treasury because fees might flow to a separate address controlled by Aave Labs instead. Founder Stani Kulechov addressed his $15 million AAVE purchase, stating he did not use those tokens to vote on the recent governance proposal. Reports suggest he bought $10 million of AAVE just before a major vote, raising concerns about concentrated control. Kulechov admitted the company did not explain how its products generate revenue. I consider the possibility of a 10 percent financial leak through swap fees a blow to community trust.
Stablecoin Supply and Compound’s Response
The stablecoin market reached a plateau in 2026, with supply figures at $309 billion in mid-October. Identified payments reached $401 billion between January and August 2026, a 42 percent increase from 2025. Aave plans to generate revenue through GHO, a stablecoin backed by diversified crypto-assets, while Compound v3 adopts a defensive posture. Compound reduces supply caps on 27 collateral assets across Ethereum Comets to combat increasing exploit frequency.
| Asset Type | Rule Applied | Action Taken |
|---|---|---|
| Dormant Assets | Rule 1 | Cap reduced to 0 |
| Active Assets | Rule 2 | Cap set 20-30% above supply |
| Primary Assets (USDC, USDT) | Rule 3 | No change |
Compound applies Rule 1 to any collateral with less than 1 percent supply utilization, such as wOETH, rswETH, and osETH. Rule 2 resizes the cap for 13 active assets to sit 20 to 30 percent above current supply balances. In the wstETH Comet, tETH and pufETH face these tight buffers, while sFRAX sees its cap reduced to 33 million despite its 65.10 percent utilization. ezETH faces a cap of 33,163 due to its 31.89 percent utilization. Primary assets like WBTC, WETH, cbBTC, cbETH, USDC, and USDT remain untouched. The Financial Stability Board noted in October 2026 that cross-border holdings and reserves remain difficult for any single authority to observe, which complicates the ability of regulators to track total market movement. Does this tightening of liquidity across other Comets create a vacuum that GHO will eventually fill?
Yield Competition and Lido’s stVaults
Lido V3 introduced stVaults to address the tension between native and pooled staking. These products allow node operators to maintain control over validator operations while providing stETH liquidity to clients. Stakers use validator consolidation to bypass the 54-day Ethereum validator entry queue. This process allows stakers to migrate stake into an stVault to capture enhanced rewards and liquidity. You should watch how these liquidity shifts affect the broader lending market.
The market saw the launch of Open USD on June 30, a stablecoin supported by 140 partners including Stripe, Coinbase, Mastercard, Visa, and BlackRock. Unlike USDC, which earns income from government bonds, Open USD passes its yield to the partners using the coin. This shift caused shares of Circle to drop 17 percent in a single day as a result. Lido continues to refine stVault infrastructure with tools for stakers like Fireblocks and FalconX to manage institutional grade liquidity and validator operations. The stVault Web UI also shows netAPR and CarrySpread details to help users monitor performance and manage validator consolidation.
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