Bank of Canada Report Highlights Aave V3's Zero NPL in 2024

A recent report by the Bank of Canada reveals that Aave V3 on Ethereum reported zero non-performing loans (NPL) in 2024, with a total loan volume of approximately $6 billion, a utilization rate of 40%, and a net interest margin of 0.64%. According to Foresight News, the report highlights that platform profits are highly concentrated, with WETH, USDT, and USDC contributing about 83% of the earnings. The study, which analyzed transaction data from January 27, 2023, to May 6, 2025, found that over-collateralization and automatic liquidation help prevent lenders in Ethereum's lending market from incurring losses. However, the model shifts risk to borrowers and limits capital efficiency compared to traditional lending systems. In terms of user behavior, recursive leverage trading accounts for 20.46% of total borrowing volume and 8.2% of borrowing transactions, with 58% of leverage traders being large investors. Liquidation activities show significant clustering, with WETH, wstETH, WBTC, and weETH comprising 90% of total liquidation value. Borrowers' combined losses during major liquidation events, including liquidation fees and the opportunity cost of missed price rebounds, account for about 10% to 30% of the total liquidation amount. Additionally, the research indicates that liquidation activities do not have a significant lasting impact on market prices.