Finance, but make it decentralised

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I was a law student at the University of Helsinki when I discovered the Ethereum blockchain, and I was immediately drawn to the community and what people were building. I did some coding as a teenager, and I have always been interested in finance, so I began to apply how the permissionless system of smart contracts could be used to create a decentralised financial ecosystem. 

I barely receive any interest in my traditional savings account, and there are so many hurdles for some people to access banking services or take out a loan. Credit checks can be discriminatory, and not everyone globally can access these kinds of services. If the future of finance is decentralised, it means that anyone anywhere can access financial services. There are no middlemen and no need for credit checks– the whole system is trustless. Loans are automatically negotiated by a system of smart contracts across the blockchain. 

That’s where the idea for ETHLend was born. ETHLend was a peer-to-peer lending and borrowing platform, so depositors had to be matched up to people wanting to take out a loan. ETHLend was one of the first decentralised applications for DeFi ever, but it was still rather clunky and inefficient compared to the DeFi products we have today. The space has greatly improved. 

When we rebranded to Aave, we switched to a liquidity pool model where users can deposit and start earning interest right away, and borrowers can instantly borrow any of the available liquidity in the protocol as long as they have enough collateral. The Aave Protocol is much more efficient than ETHLend, and the user experience is more intuitive and sleek. I’m originally from Finland, so Aave means “ghost” in Finnish, which represents our focus on building a transparent financial ecosystem not bound by the constraints of traditional finance. 

It’s 2020. Money shouldn’t sleep. 

Historically, decentralised finance gives you greater interest rates than a traditional banking account. For people who have cryptographic assets, this is a very useful way to earn a passive income while the underlying asset is loaned out to borrowers. I think your money should always be doing something for you– money should never sleep. From the borrower side, the Aave Protocol is also very useful– say you have a digital asset that you think will go up in value so you don’t want to sell it, but you need money to buy a laptop. In the Aave Protocol, you can simply use that asset as collateral to borrow a stable coin pegged to the US dollar, and buy your laptop. This loan position is flexible, and you can pay it back whenever you want as long as you have enough collateral to support the loan position. This is entirely trustless– depositors don’t need to know who the borrowers are– so credit checks are unnecessary, which makes the whole process much easier and non-discriminatory. 

We want to build a bridge between DeFi and FinTech 

We launched the Aave Protocol back in January, and already we have over $1.8B market size in the protocol. The DeFi space is growing rapidly, and new products are being built on top of existing products. It’s amazing to see the ecosystem expanding with all of these new financial tools, but we have still not reached mainstream adoption by any means. 

When people hear ‘cryptocurrency’ or ‘blockchain’ it can feel daunting, and a year ago it was much harder to access the space and use these products. However, this has changed so much recently and it gets better every day. If new users want to use the Aave Protocol, they can directly purchase crypto assets from the decentralised application with their credit card or via a wire transfer, making it easier than ever to start using Aave Protocol!

Our big vision is to bring the DeFi and FinTech spaces closer together to onboard new people to DeFi. After a year-long process, our UK branch Aave Limited recently received an Electronic Money Authorization from the Financial Conduct Authority, the major regulator in the UK. This means Aave Limited is now licensed as an electronic money institution that can issue electronic money accounts and facilitate payments and currency conversions. This is the same license companies like Revolut and Coinbase have. We will start these services in the UK, so UK-based users will be able to create accounts and hold electronic money, giving them access to the world of DeFi directly from electronic money accounts. We believe this will make DeFi services more accessible to new users, bringing us closer to mainstream adoption. Eventually, we hope the whole Aave Ecosystem will benefit from these services. 

Hot Takes

  1. Listen to your community. At Aave we’re super lucky to have an engaged community that sends us feedback on the protocol, and we listen! Many of the UI/UX improvements have been suggestions from community members. 
  2. Innovate, but do it responsibly. As more people are building tools in DeFi, security has to be a top priority, and we need to set some industry standards. Being a founder means taking personal risks, but you should never take risks with your users’ money.
  3. Composability over competition. One of the coolest things about the DeFi space is the interoperable moving parts and new projects building tools on top of other projects. This creativity expands what end-users can do with DeFi and makes for some very innovative products.

Stani Kulechov is the Founder and CEO of Aave, an open source and non-custodial money market protocol to earn interest on deposits and borrow assets. Stani was studying law at the University of Helsinki when he started delving into blockchain and cryptocurrency, and he started exploring how it could impact the traditional financial system. In 2017, Stani released ETHLend, one of the first lending protocols for decentralised finance ever. Since then, he has made it his mission to create tools for an open, transparent, and equitable financial ecosystem through the Aave Protocol. 

About Aave 

Aave is a decentralized, open-source, and non-custodial protocol for money market creation on Ethereum. Depositors earn interest by providing liquidity to lending pools, while borrowers can obtain loans by tapping into these pools with variable and stable interest rate options. Aave Protocol is unique in that it tokenizes deposits as aTokens, which accrue interest in real time. It also features access to Flash Loans, the first uncollateralized loan option in DeFi. 

For more information, visit

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