Aave — The Crypto Bank of the Future

I think the Ethereum Defi applications will surge again especially once Ethereum brings gas fees down again with Arbitrum and Optimism.

Aave is the number one TVL (total value locked) protocol on DefiPulse. It’s at a great exchange rate here vs. both the USD and more importantly ETH. Very safe good protocol which has been audited and a good governance coin.

Also, there just are not a lot of crypto banks on other blockchains yet. So even investors in other chains still come here to get loans. Compound (COMP) is its main competitor, and I’ll be researching the comparison in more detail, but I prefer Aave as a user.

One other element that should not be overlooked (HUGE) is that…

Huge Element

As crypto investors take on loans from a crypto bank they must post collateral (deposits) in order to give the bank security they will pay it back. This deposit needs to be maintained high enough that if your deposit coin falls in value you won’t be liquidated (forced sale). That means wherever a crypto investor takes their loans they will likely put all their deposits —>. in one bank or the other. Why? It’s easier to manage so you don’t get liquidated and pay less gas fees.

What this implies is that the clients a crypto bank already has will stay there and put more collateral there and take more loans there.

This creates massive liquidity suction / attraction for Aave (and Compound).

Controlling the biggest crypto bank and it’s policies has real value (governance token AAVE).

University of Michigan Bachelors in Economics, Level II CFA and CMT