Grayscale gives the conditions for AAVE to reach $175 in one year

A recent valuation report released yesterday by Grayscale Research suggests that the Aave token is currently undervalued. The firm projects that if the regulatory environment becomes more favorable for the tokenization of real-world assets, the token’s price could reach approximately $175 within the next year.

The report, called “A Guide to Buying the Dip: Valuing Crypto Using Cash Flows,” applies a discounted cash flow (DCF) model to Aave’s on-chain revenue, a technique borrowed from equity analysis and rarely used for digital assets.

Grayscale’s analysts predict that Aave will pull in approximately $60 million in revenue this year. That cash-flow projection puts AAVE’s baseline fair value between $80 and $100.

According to CoinMarketCap data, AAVE has been trading around $77 as of today, which is lower than even the lower end of Grayscale’s estimated range.

“Grayscale Research believes the $AAVE token fair value could rise to ~$175 in one year and is currently undervalued at $75,” the firm wrote on X, adding that the average age of the top 30 crypto assets is roughly eight years compared to over a century for Dow constituents.

How will AAVE get to $175?

The gap between Grayscale’s $80 to $100 base case and the $175 bull case for Aave comes down to one variable: regulation.

The higher target assumes that clearer legal frameworks around tokenized real-world assets will open the route for a wave of new demand for DeFi lending and borrowing platforms. If that happens, protocols like Aave would capture more market share and fee revenue as institutional capital will naturally follow.

Grayscale has been investing in Aave since last year. After launching the Grayscale Aave Trust in October 2024, they filed for an SEC-approved ETF in early 2026 that they could list on the New York Stock Exchange. If approved, this would allow institutional investors who can’t buy crypto directly to easily buy AAVE through a traditional stock exchange.

Aave’s main strengths and recent weaknesses

On-chain data from DeFiLlama currently shows that Aave holds $13.13 billion in total value locked across more than 20 chains, with Ethereum accounting for over $10 billion of that figure. The protocol’s yearly fee generation is at roughly $940 million, with an annual revenue of about $124 million.

Aave has had its fair dosage of drama this year, from core developers departing over governance debates to deposit outflows after exposure to an exploit where North Korea-linked hackers drained nearly $300 million from another project.

However, founder Stani Kulechov also struck a defiant tone in late May, committing to a 12-month “revenue-led protocol strategy.” He posted on X that “sustainable, consistent revenue is what proves that DeFi can evolve beyond pure token speculation into durable businesses backed by balance sheets,” as Cryptopolitan reported.

Grayscale is still bullish about Hyperliquid

Grayscale also gave positive forecasts to Hyperliquid (HYPE), Uniswap (UNI), Sky (SKY), and Maple (MPL) as protocols that score well on cash-flow-based valuation metrics. This is not the first time the investment firm has given Hyperliquid the nod, listing the HYPE staking ETF on Nasdaq, according to earlier reports covered by Cryptopolitan.

The main reason behind that was because traditional financial analysis tools are becoming more applicable to crypto as DeFi protocols gain more popularity and generate more revenue.