Cryptofinance is only now beginning to provide an environment that matches traditional finance: ways to earn steadier, more predictable returns — similar to bonds or savings products, according to Aave Labs founder Stani Kulechov and Athena CEO Guy Young.
“Most fixed income is like the distribution of risk in different formats … basically just slicing and slicing and distributing risk,” Young said during a panel at the Digital Asset Summit (DAS) in New York. “This piece of DeFi was probably the least talked about two years ago.”
Until recently, crypto users mostly traded tokens or borrowed against them, often chasing high, unpredictable yields. New tools make it possible to lock in returns, even in a market known for large fluctuations.
“What you’re doing with Pendle is offering a fixed-to-variable rate swap,” Young said, referring to a system that lets users choose between more stable or more variable returns — similar to choosing between fixed or adjustable rates.
It is not easy in crypto. “It’s very difficult to know three months out what the market is actually going to look like,” he said.
Kulechov said Aave has helped support this shift by providing deep pools of capital that other projects can tap into. “Aave kind of acts as a liquidity drain,” he said, helping to “launch a lot of the new upcoming products in DeFi.”
So far, much of the money being made still depends on trading rather than traditional loans. “A lot of DeFi returns … are largely still based on … leverage,” Kulechov said.
Over time, that may change as more real-world assets move on-chain, a process known as tokenization.
“A lot of the yield and a lot of the economy will come from the traditional financing,” he said.
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