Decentralized Finance has been huge for cryptocurrency. The evolution from digital decentralized currency to digital compound interest seems like a natural evolution in hindsight and begs the question why it didn't happen sooner. One of the big players who spurred crypto in this direction AAVE (LEND), formerly ETHLEND, has established it's lending platform in the space. With the V2 rollout I was interested in seeing how the platform has evolved since its inception and I have to say I am impressed. It looks nice and crisp with a clean layout still governed by AAVE holders and data integrity with internal audits, open source code, and chainlink oracles.
Looks great, anyone else see the problem?
What I can't reconcile with is the abysmal annual percentage yield particularly on cryptos pegged to the US dollar. A study was done which found 22% of all USD circulating were printed in 2020, so people are getting killed on inflation but the market hasn't caught up to it yet. If I'm loaning out stablecoins I need to at very minimum beat 3% which is the stated inflation goal of the Federal Reserve. My USDC I have split between two platforms Celsius and BlockFi earning me 5-8.6% APY. It's not so outrageous like BITCONEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEECT (~300% APY) that I am uneasy moving to these closed source platforms to earn more on my crypto.
AAVE has the backbone of a great platform; what needs to change is something in its governance to enable a higher yield for investors who don't have Synthetix (SNX) and SUSD. Until then I am okay spreading my risk on the other interest generating platforms except Coinbase (0.15% on USDC lmao!).