The Ethereum lending market surpassed $28 billion, while Aave Labs processed a total of $140 million in settlements in a single weekend through its automated systems.
Aave successfully processed over $140 million in liquidations over a single weekend, achieving this without any operational disruptions or accumulating bad debt. This demonstrates the company’s ability to operate under significant stress and proves its risk management capabilities.
These figures also show that Aave controls a large portion of lending activity on Ethereum (around 70%), while total active loans on Ethereum represent approximately a tenfold increase from the lows of January 2023.
Observers cited the protocol’s cross-chain footprint and newer products, such as its stablecoin GHO, as factors that contributed to liquidity and operational resilience during the sell-off.
Whales deleveraged to avoid forced liquidations
One of the market’s concerning trends is the significant deleveraging process by large Ethereum holders amidst high volatility. Among the cited cases, “BitcoinOG” sold approximately $292 million worth of ETH and used about $92.5 million in stablecoins to reduce its exposure on Aave, while “Trend Research” sold around $79 million worth of ETH and deposited 10,000 ETH on Binance to service loan obligations.
Collectively, sources estimated that loan repayments from large accounts totaled around $371 million during that period.
These actions were interpreted as proactive risk management rather than forced liquidations. By converting volatile assets into stablecoins and canceling debt within the protocol, these players managed to reduce the immediate risk of cascading liquidations.
This occurred in an already highly leveraged crypto lending market. As of January 2026, outstanding loans on Ethereum were estimated at around $28 billion, and Aave had processed automated liquidations of nearly $140 million on January 31 alone.
From a broader perspective, Aave’s handling of the liquidations demonstrated that automated mechanisms can contain the immediate systemic impact during periods of stress. However, the event also highlighted persistent risks, such as position concentration and high leverage in the loan market.
