AAVE vs LINK: Crypto Returns, Risk & Volatility (2026)

Q: Which is a better investment: AAVE or LINK?

Over the past year, LINK looks like the better investment: it had higher total return (LINK -33.2% vs AAVE -39.4%) and a higher Sharpe ratio (LINK -0.14 vs AAVE -0.21). On risk, LINK was less volatile (LINK 81.4% vs AAVE 85.2%), LINK had a smaller max drawdown (LINK -69.9% vs AAVE -74.9%), and LINK had less severe losses on the worst 5% of days (Expected Shortfall of LINK -9.06% vs AAVE -9.91%).

Written by Gale Finance Team

Reviewed by Sid Kalla CFA Charterholder

Quick answer

Which is a better investment: AAVE or LINK?

Over the past year, LINK outperformed (-39.4% vs -33.2%) with a Sharpe ratio of -0.14.

Total Return

AAVE -39.4%

LINK WIN -33.2%

Sharpe Ratio

AAVE -0.21

LINK WIN -0.14

Annualized Volatility

AAVE 85.2%

LINK WIN 81.4%

Max Drawdown

AAVE -74.9%

LINK WIN -69.9%

Analysis period: 2025-04-12 to 2026-04-11

AAVE Total Return

↓ -39.4%

LINK Total Return

↓ -33.2%

Relative Performance of AAVE vs LINK (Normalized to 100)

AAVE LINK

Normalized to 100 at start date for comparison

Key Takeaways

Total Return: AAVE delivered a -39.4% total return, while LINK returned -33.2% over the same period. LINK outperformed on total returns.
Risk-Adjusted Return (Sharpe Ratio): Both Sharpe ratios were negative (LINK -0.14 vs AAVE -0.21), meaning both underperformed the risk-free rate; LINK was less negative.
Volatility (Annualized): AAVE was more volatile, with 85.2% annualized volatility, versus 81.4% for LINK.
Maximum Drawdown: LINK's maximum drawdown was -69.9%, while AAVE experienced a deeper drawdown of -74.9%.
Tail Risk (VaR & Expected Shortfall): At the 5% level (daily log returns), AAVE's VaR was -6.79% and its Expected Shortfall (CVaR) was -9.91%; LINK's were -6.73% and -9.06%. VaR is the cutoff; Expected Shortfall is the average move on the worst days.
Skew & Kurtosis: Skew: AAVE -0.14 vs LINK -0.13. Excess kurtosis: AAVE 2.21 vs LINK 2.79. Negative skew leans downside; higher excess kurtosis means fatter tails.
Tail Days & Extremes: 2σ tail days (down/up): AAVE 6/9, LINK 6/11. Worst day: AAVE -18.03% (2026-02-05) vs LINK -20.60% (2025-10-10). Best day: AAVE +19.20% (2025-05-08) vs LINK +14.63% (2026-02-24).
Risk ratios: Sortino - AAVE: -0.31 vs. LINK: -0.21 , Calmar - AAVE: -0.53 vs. LINK: -0.48 , Sterling - AAVE: -1.44 vs. LINK: -0.91 , Treynor - AAVE: -0.05 vs. LINK: -0.34 , Ulcer Index - AAVE: 41.54% vs. LINK: 40.84%

Aave vs Chainlink Correlation

0.62 Average Correlation

Aave and Chainlink are strongly correlated over the past year. With a correlation of 0.62, these assets tend to move together, limiting diversification benefits.

For portfolio construction, this strong correlation means holding both AAVE and LINK provides limited risk reduction — they're likely to decline together in downturns.

Metric	Value
Current (30-day)	0.43
Average (full period)	0.62
Minimum	-0.31
Maximum	0.97

Correlation measures how closely two assets move together. Values near +1 indicate strong co-movement, near 0 indicates independence, and negative values indicate inverse movement.

Investment Comparison

If you invested $10,000 in each asset on April 12, 2025:

AAVE $6,060.12 -39.4%

LINK $6,678.82 -33.2%

Difference: $618.7 (LINK ahead)

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Aave and Chainlink: Risk Analysis

Aave experienced its maximum drawdown of -74.9% from 2025-08-23 to 2026-04-11. It has not yet recovered to its previous peak.

Chainlink experienced its maximum drawdown of -69.9% from 2025-08-22 to 2026-02-04. It has not yet recovered to its previous peak.

Smaller drawdowns and faster recoveries indicate lower downside risk and greater resilience during market stress.

Sharpe Ratio of AAVE and LINK

AAVE Sharpe Ratio

↓ -0.21

LINK Sharpe Ratio

↓ -0.14

Sharpe ratio measures return per unit of risk (volatility). A higher Sharpe indicates better risk-adjusted performance. Both Sharpe ratios were negative (LINK -0.14 vs AAVE -0.21), meaning both underperformed the risk-free rate; LINK was less negative.

A Sharpe above 1.0 is generally considered good, above 2.0 is excellent. Negative Sharpe means the asset underperformed the risk-free rate. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).

Sortino Ratio of AAVE and LINK

AAVE Sortino Ratio

↓ -0.31

LINK Sortino Ratio

↓ -0.21

Sortino ratio measures return per unit of downside risk. Unlike Sharpe, it only counts downside deviation (returns below the target return). LINK had better downside-adjusted returns.

A higher Sortino is better. It's useful when upside volatility is common (crypto is the obvious example). Downside deviation: AAVE 59.4% vs LINK 55.8%. Calculated on each asset's full 365-day lookback of available prices, using the daily risk-free rate as the target return, and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).

Calmar Ratio of AAVE and LINK

AAVE Calmar Ratio

↓ -0.53

LINK Calmar Ratio

↓ -0.48

Calmar ratio compares CAGR to maximum drawdown. Higher Calmar means more return per unit of worst drawdown. LINK posted the higher Calmar ratio.

Calmar is computed on each asset's full 365-day lookback and uses the max drawdown over that same window.

Sterling Ratio of AAVE and LINK

AAVE Sterling Ratio

↓ -1.44

LINK Sterling Ratio

↓ -0.91

Sterling ratio measures excess return per unit of average drawdown (typically drawdowns worse than 10%). LINK posted the higher Sterling ratio.

Sterling uses average drawdown events deeper than 10% and subtracts the risk-free rate to report excess return.

Treynor Ratio of AAVE and LINK

AAVE Treynor Ratio

↓ -0.05

LINK Treynor Ratio

↓ -0.34

Treynor ratio measures excess return per unit of market risk (beta) instead of total volatility. AAVE posted the higher Treynor ratio.

Treynor uses beta vs the S&P 500 (SPY) on shared dates and the average 3-month Treasury rate as the risk-free rate.

Ulcer Index of AAVE and LINK

AAVE Ulcer Index

41.54%

LINK Ulcer Index

40.84%

Ulcer Index captures drawdown depth and duration. Lower Ulcer Index means less drawdown pain. LINK had the lower Ulcer Index (less drawdown pain).

Ulcer Index is computed from each asset's drawdown series over the full lookback window.

Tail Risk & Distribution Shape (1-Year): Aave vs. Chainlink

This section looks at the shape of daily returns, not just the average. Tail stats are computed per asset on its own daily series (crypto includes weekends). We use daily log returns $\ln\left(\frac{P_t}{P_{t-1}}\right)$ so multi-day moves add cleanly.

Definitions: Value at Risk (VaR), Expected Shortfall, skew, kurtosis, and fat tails.

Metric (1-Year)	AAVE	LINK
5% VaR (daily log return)	-6.79%	-6.73%
5% Expected Shortfall (CVaR)	-9.91% (worst 19 days)	-9.06% (worst 19 days)
Skew	-0.14	-0.13
Excess kurtosis	2.21	2.79
2σ tail days (down / up)	6 / 9	6 / 11
Worst day	-18.03% (2026-02-05)	-20.60% (2025-10-10)
Best day	+19.20% (2025-05-08)	+14.63% (2026-02-24)

Downside co-moves (2σ) — 1-Year

Computed on shared dates only (n=364). A “2σ downside move” means a shared-close log return more than 2 standard deviations below that asset’s own mean on this shared-date series. Dates below show simple returns (%) for readability.

When LINK has a big down day, AAVE also does

33.3%

2 / 6 days

When AAVE has a big down day, LINK also does

33.3%

2 / 6 days

Show downside tail dates

Dates below are shared-date observations. The “Date” is the period end (close). Tail thresholds are computed on log returns, but the table shows simple returns (%) for readability. Returns are computed from the previous shared close to this one (for example, Friday → Monday includes weekend moves).

Days when both AAVE and LINK had a big down day (2σ)

Date (interval)	AAVE	LINK
2025-10-10	-16.90%	-20.60%
2025-11-03	-13.36%	-13.27%

Days when AAVE had a big down day

Date (interval)	AAVE	LINK
2025-10-10	-16.90%	-20.60%
2025-11-03	-13.36%	-13.27%
2025-11-14	-12.45%	-4.93%
2025-12-22	-8.95%	+1.09%
2026-02-05	-18.03%	+11.47%
2026-03-03	-9.06%	+6.31%

Days when LINK had a big down day

Date (interval)	AAVE	LINK
2025-08-19	-3.92%	-8.66%
2025-08-25	-8.63%	-9.46%
2025-10-10	-16.90%	-20.60%
2025-11-03	-13.36%	-13.27%
2026-01-30	-6.31%	-9.02%
2026-02-04	-0.90%	-12.47%

Read this as “how ugly the ugly days get”, not as a precise forecast. One-year samples are small, so tail estimates are inherently noisy.

Aave vs Chainlink Volatility (AAVE vs LINK)

AAVE Volatility

85.2%

±4.46% daily

LINK Volatility

81.4%

±4.26% daily

Typical daily swing

AAVE

±4.46%

LINK

±4.26%

Aave's annualized volatility of 85.2% means it typically moves ±4.46% on any given day.

Chainlink's annualized volatility of 81.4% means it typically moves ±4.26% on any given day.

AAVE's higher volatility means a wider path to returns — this can be attractive for tactical, shorter-term exposure, while LINK's smoother profile may better suit long-term allocators seeking steadier growth.

For comparison, the S&P 500 typically has 15-18% annualized volatility, translating to roughly ±1% daily moves. Higher volatility means larger potential gains but also larger potential losses.

Aave vs Chainlink Performance Over Time

Metric	AAVE	LINK
30 Days	-19.8%	-3%
90 Days	-46.4%	-33.3%
180 Days	-65.6%	-55.8%
1 Year	-39.4%	-33.2%

Shorter time frames can show different leaders as market conditions change. Consider your investment horizon when comparing performance.

Full Comparison of Aave vs. Chainlink (1-Year)

Metric	AAVE	LINK
Total Return	-39.4%	-33.2%
Annualized Volatility	85.2%	81.4%
Sharpe Ratio	-0.21	-0.14
Sortino Ratio	-0.31	-0.21
Calmar Ratio	-0.53	-0.48
Sterling Ratio	-1.44	-0.91
Treynor Ratio	-0.05	-0.34
Ulcer Index	41.54%	40.84%
Max Drawdown	-74.9%	-69.9%
Avg Correlation to S&P 500	0.45	0.42
5% VaR (daily log return)	-6.79%	-6.73%
5% Expected Shortfall (CVaR)	-9.91%	-9.06%
Skew	-0.14	-0.13
Excess kurtosis	2.21	2.79
2σ tail days (down / up)	6 / 9	6 / 11

Audit this calculation

Formulas, inputs, and conventions used to compute the metrics on this page.

Inputs & conventions

Shared window for pair metrics: 2025-04-12 → 2026-04-11 (last shared close).
Rolling correlation sample (shared closes): 335 rolling 30-day values (from 364 shared daily returns).
Annualization (days/year): AAVE: 365 days/year; LINK: 365 days/year.
Risk-free rate: Uses the 3-month U.S. Treasury yield (FRED: DGS3MO), averaged over each asset’s window:

AAVE: 4.17% over 2025-04-12 → 2026-04-11.

LINK: 4.17% over 2025-04-12 → 2026-04-11.
Volatility drag (rule of thumb): Estimated from annualized volatility (simple returns). For the log-return framing, see Log returns.

AAVE: ≈ -36.3%/yr

LINK: ≈ -33.1%/yr
Data alignment: No forward fill. Correlation and tail co-moves are computed on shared closes only.
For cross-calendar pairs (e.g., crypto vs stocks), weekend/holiday moves roll into the next shared close.
Return conventions: Volatility/Sharpe/Sortino use simple daily returns. Tail-risk uses daily log returns for distribution stats (but tables show simple returns). Log returns.

Formulas

Daily simple return

r_t = \frac{P_t}{P_{t-1}} - 1

Volatility

\sigma_{ann} = \sigma(r_t)\sqrt{A}

Volatility drag (approx.)

\text{drag} \approx \tfrac{1}{2}\sigma_{ann}^2

Sharpe Ratio

S = \frac{A\,\bar{r} - r_f}{\sigma(r_t)\sqrt{A}}

Sortino Ratio

So = \frac{A\,\bar{r} - r_f}{\sqrt{\mathbb{E}[\min(0,\,r_t - r_f/A)^2]}\,\sqrt{A}}

Maximum Drawdown

MDD = \min_t\left(\frac{P_t}{\max_{s \le t} P_s} - 1\right)

Average Correlation

\rho = \frac{\operatorname{cov}(r^A,\,r^B)}{\sigma_A\,\sigma_B}

Log returns

\ell_t = \ln\left(\frac{P_t}{P_{t-1}}\right)

Notation

$P_t$: Price on day t.
$r_t$: Simple daily return.
$\ell_t$: Log daily return.
$\bar{r}$: Average daily return.
$\sigma(r_t)$: Standard deviation of daily returns.
$A$: Annualization factor (days/year).
$r_f$: Annual risk-free rate.

Aave vs Chainlink: Frequently Asked Questions

Which has higher volatility: AAVE or LINK?

AAVE showed higher volatility at 85.2% annualized, compared to 81.4% for LINK Over the past year. Higher volatility means larger price swings in both directions.

Does AAVE provide diversification when held with LINK?

AAVE and LINK are strongly correlated over the past year, with an average correlation of 0.62. This strong correlation limits diversification benefits.

How bad are the worst 5% days for AAVE vs LINK?

Over the past year, AAVE's 5% VaR was -6.79% and its 5% Expected Shortfall was -9.91% (worst 19 days). LINK's were -6.73% and -9.06% (worst 19 days).

Do AAVE and LINK crash together on bad days?

On shared dates (n=364), when LINK has a 2σ down day, AAVE also does 33.3% (2/6 days). In the other direction, when AAVE has one, LINK also does 33.3% (2/6 days).

Which has better risk-adjusted returns: AAVE or LINK?

Both assets posted negative Sharpe ratios Over the past year (LINK -0.14 vs AAVE -0.21), meaning both underperformed the risk-free rate; LINK was less negative.

Can AAVE and LINK be combined in a portfolio?

Yes, though allocation sizing matters. Their strong correlation provides limited risk reduction since they tend to move together. AAVE's higher volatility (85.2%) means even small allocations can materially impact overall portfolio risk.

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