AAVE Rallies 9% Amid Community Hype Around Potential Sonic Blockchain Launch and Whale Accumulation

Aave (AAVE) rebounded to an intraday high of $274.91 on Feb. 5, gaining 9.6% over the past 24 hours while recovering from earlier losses during a market-wide slump

AAVE price rallied over 9% on Feb. 5 amid community hype around its potential launch on Sonic blockchain and an uptick in whale accumulation.

People familiar with the matter told crypto.news earlier this week that AAVE V3 is set to launch on Sonic, an EVM-compatible blockchain network, following a community vote.

With nearly 100% approval, V3 may soon go live on Sonic following a final vote, which community members expect will enhance Aave’s adoption and revenue potential.

Sonic is a blockchain network that aims to provide high throughput and low latency for decentralized applications (dApps). The network is designed to be compatible with the Ethereum Virtual Machine (EVM), which allows developers to easily deploy and operate their dApps on Sonic.

The integration of Aave V3 with Sonic will expand the decentralized lending protocol's reach to a new blockchain ecosystem, potentially increasing the adoption and utilization of Aave's services.

Moreover, the decentralized lending protocol processed $210 million in liquidations following the Feb. 3 flash crash, which wiped out approximately $2.2 billion from the crypto market. The event marked the largest single-day liquidation event for the protocol since the Aug. 5 crash.

Periods of extreme volatility often lead to bad debt accumulation, as a combination of multiple liquidation requests, sharp price drops, and low demand can overwhelm a protocol's ability to process liquidations efficiently.

However, Aave not only navigated this stress test without incurring additional bad debt but also managed to reduce its existing bad debt by 2.7%.

This demonstration of resilience and financial stability by the project has likely renewed investor interest, thereby driving demand for AAVE.

As reported earlier, newer data from Lookonchain shows a smart whale recently purchased 102,259 AAVE tokens, spending approximately $27.5 million worth of staked ETH.

Meanwhile, according to analyst Ali Martinez, whales picked up 62 million AAVE between Jan. 29 and Feb. 1.