- Aave and Maker have long been enemies, but rebranding and reboots have reignited a bromance.
- DeFi stalwarts have shown resilience and generated revenue.
- What comes next could set the course for DeFi.
In the middle of a crypto conference in South Korea this month, the founders of two of DeFi’s most influential protocols dedicated valuable time to something different: a live Starcraft II tournament.
Stani Kulechov, the founder of Aave, and Rune Christensen, the co-founder of Maker and its decentralized stablecoin DAI, have not always seen eye to eye.
But with the Starcraft tournament, the two crypto OGs enjoyed their love of gaming and each other’s company.
“Stani is my brother,” Christensen said DL News on the sidelines of this year’s Token2049 event in Singapore.
“We are DeFi brothers,” Stani said in a separate interview.
Repeat?
Risky proposition
For some time now, the Aave and Maker communities have been clashing over several hot-button issues.
In April, Maker came under fire for its risky proposal to purchase $1 billion worth of untested stablecoin from Ethena. Then, in July, the Aave community claimed that Maker was not holding up its end of the bargain in a revenue-sharing agreement between the two.
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At one point, Kulechov even supported a proposal to remove DAI from all Aave marketplaces. This would have been a drastic move given the importance of the stablecoin to the lender’s business.
However, the tension eased after Aave reduced the amount DAI users could borrow, and the two eventually found common ground on the revenue sharing agreement.
Today, the two projects are being redesigned at a pivotal moment in the evolution of decentralized finance.
Under the umbrella of newly launched Avara, Aave has transformed into a DeFi supermarket offering loans, a stablecoin, a crypto wallet, and a social media network.
“We’re experiencing this DeFi renaissance moment where people are looking back at what was built in DeFi.”
— Stani Kulechov, Aave
And Maker, now called Sky, is launching a brand new stablecoin to the market. These moves highlight how both projects emerged from the 2022 crypto crisis with resilience and a plan.
While so many DeFi projects fail amid rug pulls, hacks, and obsolescence, Aave and Maker, er, Sky, have quietly built businesses by generating something rare in the space: revenue.
Last year, Aave took in $283 million in revenue, and Sky took home $233 million itself, according to DefiLlama.
So what better time for Kulechov and Christensen to clear things up?
“We’re experiencing this DeFi renaissance moment where people are looking back at what was built in DeFi and what actually has legs and fundamentals,” Kulechov said.
“It’s Aave and it’s Sky.”
The first days
Aave now boasts $12.5 billion in TVL, or investor deposits, making it the largest DeFi protocol after Lido, according to data from DefiLlama. Sky is the fifth ranked project with $5.7 billion. Sky and Aave were born from the heady days of heavy coin creation in 2017.
While many crypto players indulged in the explosion of ICOs – initial coin offerings – these two projects shaped lasting breakthroughs.
Sky, then called Maker, issued the industry’s first decentralized stablecoin, called DAI.
Aave, then called EthLend, allowed investors to lend and borrow their cryptocurrencies.
One offered dollars on the blockchain, the other simple banking operations.
From the beginning, the two functioned in complementary but distinct ways. One of Aave’s very first lending markets was for the stablecoin DAI.
The duo played a vital role during the DeFi summer of 2020, a period that saw the niche absorb nearly $180 billion of investor money.
They stayed afloat as summer turned into a freezing crypto winter in 2022, and over 77% of that money fled the DeFi space.
The partnership between Sky and Aave began to cool the following year.
In May 2023, Sky launched its own lending and borrowing product called Spark Protocol. It even used Aave’s code as part of a revenue sharing deal agreed to by both protocols.
Spark aimed to drive DAI adoption by creating incentives not found elsewhere in the market.
Two months later, Aave fought back.
It launched its own decentralized stablecoin called GHO in July 2023. Like DAI, GHO was an oversized cryptocurrency pegged to the US dollar.
Suddenly, Sky and Aave were no longer operating in parallel but were colliding.
Working together
When the Maker community proposed backing $1 billion in DAI with Ethena’s untested high-yielding stablecoin, the Aave community proposed eradicating all DAI markets.
“The departure process should begin immediately in the event of a favorable outcome,” Kulechov wrote at the time.
After an analysis by Chaos Labs highlighted the risk and proposed less drastic measures, Aave ultimately retained DAI, and there are still hundreds of millions of DAI circulating around Aave today.
Wider space
“It’s about sending a message to a broader space,” Christensen said. “Sky and Aave can figure out how to work together.”
The budding bromance extends beyond the two founders. Aave and Sky have announced a series of new integrations to bring the two protocols closer together, called Sky Aave Force.
Most notable for DeFi investors is the new incentivized USDS marketplace on Aave.
The marketplace will offer users competitive pricing for the new stablecoin, token rewards from Sky, and additional Aave rewards through its merit program. This program offers bonuses to users who use Aave’s GHO stablecoin or regularly vote in the DAO, for example.
It’s more than a technical integration, Kulechov explains.
“This shows that there is a lot of human composability. People work together. It’s not just about connecting technology.
Liam Kelly is a DeFi correspondent and Ben Weiss is a Dubai correspondent at DL News. Do you have any advice? Send them by email to liam@dlnews.com And bweiss@dlnews.com.
