DeFi Composability: Embracing Crypto-Lending Innovations

4 sept 2020 • 4 min read

To spread the message, our CEO, Jay Hao, is holding a new virtual OKExDeFi Roundtable talk series with leaders from various industries to discuss their DeFi progress, insights and future plans.

In this roundtable, Jay interviews Stani Kulechov, the founder and CEO of Aave. In 2017, Stani released ETHLend, one of the first DeFi DApps ever created. Since then, he has made it his mission to create tools for an open, transparent and equitable financial ecosystem through the Aave Protocol.

Here are the key highlights from the roundtable.

Jay Hao: Recently, Aave obtained a landing license in the United Kingdom. Is that why you have a fiat gateway on the website, and would you use any from third parties?

Stani Kulechov: We received an electronic money license, so the idea of that is: Aave protocol is decentralized, but what we want to do is create access points into the decentralized protocols and help people go from fiat to crypto, or deposit into the Aave protocol. So, it is our goal to increase mainstream adoption and bring fintech and decentralized technology closer together.

There are two gateways we are currently using. What it allows us to do is to go from a wire transfer, or a so-called IBAN transfer in Europe, and credit cards to deposits into Aave. Actually, to deposit into Aave, you don’t always have to deposit — you can just buy A token when you deposit into Aave. For example, for 100 USDT, you get 100 A USDT in return. This A USDT is interest-bearing USDT, which algorithmically will grow in your balance. It’s one-to-one with what you deposit there, so it’s a way to see how your balance grows. It also means you can go to any market where those A tokens are traded and just buy them. Then you have permissionless access to a global savings account. This is a very cool thing, especially if you’re in a country that has high inflation. If you have a gateway of going from fiat to A tokens, that’s basically all you need.

Jay Hao: There is very exciting news here — Aave v2 is coming soon! Besides transaction fee optimizations and other features, Aave v2 will collaborate with a real estate tokenization firm, RealT, and open private markets to support tokenized assets of all kinds. What is the reason behind this move, and how do you evaluate the role of real-world assets in DeFi?

Stani Kulechov: This is an interesting question because I’m a firm believer in the idea of the tokenization of things — that we will have more and more assets tokenized, which means taking value from real life and putting it on chain, making it available and permissionless for everyone to use in terms of billing, or just trading the value or using it as collateral.

As Aave is a lending protocol, our goal is to utilize this real-world asset collateral and unleash that liquidity out of it. Our goal is to use those tokenized properties as collateral in Aave, a separate money market with separate risk parameters and adjustments. The idea is that whoever is owning those — and by “owning,” I mean holding those tokens of those properties — can actually borrow stablecoins against them. This allows you to take equity out of your real-world asset holdings.

I think we’ll see more moves in this direction because we have tokenized the most important thing in the blockchain space, dollars. We have so many tokenized dollars and it’s quite wide. I think it’s a natural step to go forward and tokenize things that we haven’t yet.

Jay Hao: What more do you hope centralized players like OKEx can do to facilitate the DeFi space?

Stani Kulechov: Well, I think there are a lot of opportunities for centralized market participants to explore DeFi. I would like to see deposit-staking into DeFi and protocols, like Aave, that allows users to earn interest in a decentralized fashion.