Summary: As Ethereum continues to grow in adoption and price, Aave has plans to make sure they are the primary DeFi protocol on the platform. Integrations Lead Marc Zeller told Bitpush News they plan to launch Aave on top of several layer 2 solutions in the coming weeks, are continuing to innovate with new ideas, and ...
As Ethereum continues to grow in adoption and price, Aave has plans to make sure they are the primary DeFi protocol on the platform. Integrations Lead Marc Zeller told Bitpush News they plan to launch Aave on top of several layer 2 solutions in the coming weeks, are continuing to innovate with new ideas, and predict 20 million DeFi users by the end of 2021.
The liquidity protocol Aave was launched in 2017 under the name ETHLend, and was one of the first decentralized lending protocols on Etheruem. In 2020, they rebranded to “Aave,” which is the Finnish word for ghost, and represents how they want to make a transparent and open financial system. They have achieved $3.5 billion in deposits from users since their launch, due to their constant innovation and relevancy in the DeFi space. Some of their most useful features include flash loans, stable borrowing rates, and credit delegation. All of these features are available on a diverse range of nearly 20 ERC20 tokens, and the protocol is insured for $220 million and has the most audits of any DeFi project.
On DefiPulse, Aave ranked #1 in total value locked for lending platforms, and plans to keep this position as scalability comes to Ethereum mainnet. Each Layer 2 solution is separate from one another, so funds on Matic Network cannot be transferred to Loopring without going through the main Ethereum blockchain, for example. In order to mitigate this problem, Zeller stated Aave will be on multiple Layer 2s, and sooner than you might think:
“Aave has a multi-market approach. So it will not just be one Layer 2 solution, but actually several… That’s the top priority for Aave for Q1 2021… there has been very active development and we are very close to the finish line.”
The Aave team strongly believes that Layer 2 will revolutionize Ethereum, and make high transaction fees laughable.
“People in this summer will discover DeFi and be on board on DeFi and they will never believe us when we will tell them how much we spend in 2020 in transaction fee. They will just not believe us because for them, dozens of actions will cost like one dollar or cents.”
Even though Ethereum is the biggest DeFi platform currently, there are competitors looking to take its spot. Two of these are Cardano and Polkadot, which have seen significant price increases in this bullrun. Aave is open to the idea of building on these platforms, making the protocol multi-blockchain and opening it up to even more users.
“Expanding decentralized finance services outside of Ethereum, of the Ethereum playground, to discover new programs, to meet new user base, to onboard new kinds of assets. And that's probably going to be one of the main focus[es] of 2021… we call [these platforms] the New Frontiers.”
In the current global economic situation, banks have interest rates near zero percent, and some even have negative rates, which means that ordinary people get extremely low interest rates on their money, and have very little incentive to save. This is unprecedented in the world economy, and there is a lot of uncertainty about what will happen in the global financial market. Aave is positioned to offer users the ability to earn interest on their money, including stablecoins, during these times, and reach an audience of billions of people looking for a safe place to store their money.
“In a world of negative interest rates for deposits, having like four to six percent on DeFi even on the long term will be incredible.”
After the XRP lawsuit in late December, some investors are worried that the cryptocurrencies they hold will be classified as securities, and regulated by the U.S. Government. Aave is not concerned about this possibility, as they are sufficiently decentralized.
“If you own the AAVE asset, you own the Aave Protocol… Compared to what happened in Ripple Labs… the holding of the Aave asset is very much distributed.”
As the “Swiss Army Knife” of DeFi, Aave has plenty of use cases, but they are continuing to develop, even reaching out to the community through hackathons and sponsorships that will help the community grow.
“The main specificity and features of Aave is innovation, innovation, innovation, and we will not stop there… We have, as of today, more than one hundred and fifty integrations of the Aave Protocol.”
Aave is adamant in the fact that DeFi is not a fad, and it will be here to stay. They predict that the proliferation of blockchain applications, such as NFTs, gaming, and speculation, will lead the DeFi ecosystem to have 20 million users by the end of 2021, and Aave is taking this opportunity to build the financial tools of the future.
“I'm ready to bet on 20 million users in 2021...Let's make DeFi for everyone.”
The transcript for the full video can be found below:
Bitpush: Hello, everyone, thank you for joining us. My name is Lincoln Murr and I'm here with Marc Zeller, integrations lead at Aave. So first off, can you explain what Aave is for those who are unaware?
Marc Zeller: Yeah, for sure, Aave is a liquidity Protocol. So basically, we are the financial middleware for what we call Decentralized Finance so, anybody with assets can deposit their assets into the Aave Protocol and basically make that liquidity available for borrowings and act as lenders. And obviously, if someone borrowed that available liquidity, they would pay interest and that interest would seamlessly go back to you as a liquidity provider. So it's a cool and decentralized way to gain passive income on your assets and make your money work.
Bitpush: So what do you think makes Aave stand out from some of the other lending protocols? Why do you think that is the biggest at the moment, with over two billion dollars in locked value?
Zeller: Yeah. So basically, Aave is not a new project because we started the project in 2017 when we were called ETHLend, and basically we launched a new version of the Protocol, which is the name Aave, in January 2020. So slightly more than a year from now. And we grew from zero dollars of deposit to three point five billion dollars to date. And I think one of the main reasons for our growth and our success and the adoption of Aave within Ethereum and the blockchain community was the innovation that we provide to the ecosystem. So we basically created and standardized on the borrow side the stable rates. We created functions and features such as flash loans that increase the average yield for depositors. We listed a very diverse set of assets. There's more than twenty one assets listed on Aave. That's more than any other Decentralized Finance platform available as of today. And we keep iterating on innovation and we also are the most audited Decentralized Finance Protocol of the ecosystem and we also introduce safety modules. That is a protection led and managed by the Aave token holders that protects the Protocol to up to 220 million dollars as of today. So we have the largest protection of the Decentralized Finance ecosystem as well. So all these little things add up to to give a clear advantage of Aave compared to the other solutions.
Bitpush: So Ethereum fees have been skyrocketing lately. Does Aave any plans to lower fees and move to a layer two solution to help with Scalability?
Zeller: As we announced in our last community meetings and community call that we did a couple of weeks ago, there's very active development being done on the Aave in order to reach an upgrade from Ethereum one to Ethereum Layer 2 and basically Aave has a multi-market approach. So it will not just be one layer two solution, but actually several. And the idea is to make DeFi accessible to anybody, no matter what is the size of the portfolio, because one of the main issue and drawbacks and pain points of very high transaction fee on Ethereum is that if you don't have a significant portfolio, it just doesn't make sense to use Decentralized Finance services because Aave has very interesting yield and passive income for depositors. But if your transaction fee is like fifteen dollars, twenty dollars, twenty five dollars and your portfolio is one hundred dollars, you will need years, even of 10 percent APY rates of returns in order to recoup your investment of depositing into Aave or any other DeFi platform. And that's why we are very much focused and that's the top priority for Aave For Q1 of 2021, to deploy at least the first implementation on Aave, on layer two as fast as possible. And I cannot share specific details because we will not spoil the fun for the community. But what I can share is that there has been very active development and we are very close to the finish line. Transaction fee would be a thing of the past. People in this summer will discover DeFi and be on board on DeFi and they will never believe us when we will tell them how much we spend in 2020 in transaction fee. They will just not believe us because for them, dozens of action will cost like one dollar or cents. So it would be a complete game changer. And a biding shift for the newcomers.
Bitpush: So would you ever consider expanding Aave to another smart contract platform like Polkadot, Cardano, any one of those?
Zeller: Yes. So right now we have to share that we are born and raised in Ethereum. We are an Ethereum based project. And most of our skills, most of our expertise are on what we call EVM based chain. So Ethereum virtual machine developments. But that doesn't mean there's not a future in what we call internally the new frontiers. So expanding Decentralized Finance services outside of Ethereum of the Ethereum playground to discover new programs, to meet new user base, to onboard new kinds of assets. And that's probably going to be one of the main focus as well of 2021, because right now we are working very hard on Ethereum based layer 2 solution.
But I think the natural next step is to expand what we call the new frontiers.
Bitpush: So AAVE token can serve as many different purposes on the platform, like the governance and staking. Are you worried that there's going to be some sort of regulatory backlash or the claim that Aave is a security like we're seeing right now with XRP?
Zeller: The main difference between Ripple labs and Aave is that Aave is decentralized and completely decentralized.
So basically, if you own Aave, if you own the AAVE asset, you own the Aave Protocol. And that's completely clear. We have these AIP system where adding a new asset, doing a modification on the Protocol create new markets. All of that needs to be enforced directly from a technical perspective. It's not just from a political perspective, if I can use that word, but also from a code perspective. You need to actually have the approval from the token holder in order to make the Aave Protocol involved. And the second thing is that the holdings compared to what happened in Ripple Labs or the Protocol like that, the holding of the Aave asset is very much distributed. And for example, the Aave genesis team doesn't have like a huge percentage of the supply.
There's been a few investors into Aave that has been on board from 2017 to 2020, but their holdings also represent a fraction of the total supply because it is not a new project like ETHLend was done in 2017. So it's been years that the supply has been distributed to tens of thousands of hands, even hundreds of thousands, and that makes it much more decentralized.
So I don't have any significant concern about that.
Bitpush: So Aave has been referred to as the Swiss Army knife of I mean, there's so many different purposes and utilities on the platform. Are there any future plans you have to add more features, or is this about what we can expect from Aave for the long term future?
Zeller: I think everybody that followed Aave and you know and knows that's one of the main specificity and features of Aave is innovation, innovation, innovation, and we will not stop there. That's many things we want to build. Together with the community, there's more and more community development. So not directly part of the vision insisting that they are building new features. We also are community first and ecosystem first project. So we have, as of today, more than one hundred and fifty integration of the Aave Protocol. So people are building decentralized application on top of Aave, for example, defiserver.com that allows you to manage your position and your trading position on top of having all this kind of stuff.
So. This is a marathon, and we didn't even really start yet. There's many things to come and there's many things to build and we will be together with the community.
Bitpush: Incredibly exciting and like you said, you have a lot of community developers and Aave has recently sponsored the market make hackathon. Is sponsoring these hackathons another strategy to get more people to build on top of the Aave ecosystem and have other people build more features for you?
Zeller: Yeah, exactly, and I think it's a strategy that paid off very well in 2020 and we will keep doing it in 2021. We were major sponsor of most hackathons on Ethereum in 2020. And there's two benefits to that. The first thing is to have a completely new, fully fledged application and ecosystem that builds on top of Aave and do their own business model. And they are all services that are that have been kickstarted and started in hackathons and then can bloom inside the ecosystem, things like DeFi server, but also Aavegochi. That is super interesting at I looking forward for the launch in early February on Matic all this kind of stuff. And also internally from the Aave Genesis team we hired probably our best developers from the pool of Hackathon participants we found this year. So guys like Lucas, that was the creator of Aave Watch, watch guys like David, that was the creator of Collateral Swaps. And so many other guys joined the Aave Genesis team because hackathons for us is the best venue to find the best talent that strengthened Aave and allow us to to have more open ways and more strengths to develop new features.
Bitpush: So if you think the Aave team has one goal for 2021, what would that goal be and why?
Zeller: I think like the major first goal and something that we want to achieve as fast as possible is to bring back DeFi DeFi as a financial tool for everyone. Not a very cool and interesting tool, but only for the rich. We want people that own one hundred dollars and even less than that to be able to enjoy it and take their own path to financial freedom.
Bitpush: So what do you think is your favorite sort of application that's used Aave to build something? Would you say it's the Aavegochi one you talked about earlier?
Zeller: I like these kinds of games and I think gaming is like the key to our use case because Decentralized Finance I see it as a method where as an enabler for creating the all the ecosystem that we allow to use cases that are more user focused to bloom. Because at the end of the day, when I say we want to create an application that will be used by five billion people, I don't think we will have five billion traders in the future. And I'm not even sure we want that like it is a good thing that everybody's a speculator, all these kinds of things. But if we can have the speculation work for the depositors and that interest and passive income that is collected from this speculation directly be used inside games, inside a no-loss ecosystem such as PoolTogether, which is also a great application. You can have the peculiar use case and help it grow, and probably it will happen this year. I'm ready to bet on that with you. And it's recorded. So let's see and let's look at that again about this prediction in a year is that right now the DeFi ecosystem is around one million people. But thanks to games and NFT based applications, all these kinds of cool stuff, on layer 2, we would have like 10 million users or even 20 million users. I'm ready to bet on 20 million users in 2021.
Bitpush: All right, well, thank you so much for your time today. It is great to talk to you about how Aave is planning to revolutionize not only finance, but DeFi as well and bring it back to everyone, not just the rich.
Zeller: Let's make DeFi for everyone.