DefiLlama founder 0xngmi has pushed back on claims that Aave's total value locked (TVL) is overstated because of circular borrowing strategies, insisting the data platform's methodology already excludes borrowed assets from the headline metric. Responding on X to concerns that Ethena-style collateral loops were inflating Aave's apparent size, 0xngmi said DefiLlama "doesn't count borrowed assets in TVL," meaning "cycled lending doesn't inflate" the number in its dashboards.
Ethena loop controversy
He added that duplicate calculations tied to Ethena collateral loops on Aave had previously been removed from DefiLlama's tracking, after users flagged that some looped positions were being reflected more than once in ancillary breakdowns. On its Aave and Aave v3 methodology pages, DefiLlama states that TVL "counts the tokens locked in the contracts to be used as collateral to borrow or to earn yield" and that "borrowed coins are not counted towards TVL," specifically "to avoid inflating the TVL through cycled lending."
Aave data snapshot
The clarification comes as leveraged DeFi strategies built around Aave, Ethena's USDe and restaking-linked collateral have grown more complex. DefiLlama data shows Aave's TVL surged over 45% in some periods, from roughly $24 billion to about $34.9 billion, as network fees rose from ~$48 million in June to $65 million in July, signaling heavier borrowing demand. By mid-2025, Ethena's own TVL jumped from $1 billion to nearly $11 billion, with protocol revenue more than doubling month-on-month, underscoring how loop-enabled yield strategies now drive a large share of DeFi activity. Aave's native token AAVE trades with a market cap of roughly $1.45 billion and 24-hour volume near $666 million, with prices fluctuating between ~$89 and $94. Its all-time high remains $661.69 set on May 18, 2021. Another data point shows net deposits into Aave crossed $60 billion, even as AAVE's price consolidated around $265, suggesting deeper usage does not always translate into immediate token appreciation.
0xngmi maintains that despite this structural leverage and growth of collateral loops, the platform's methodology means "TVL is not artificially inflated" by recycled borrowing, though acknowledged users still need to understand how much of that collateral ultimately underpins leveraged strategies.