Crypto finance is only now beginning to offer an environment that matches traditional finance: ways to earn more stable and predictable returns – similar to bonds or savings products, according to Aave Labs founder Stani Kulechov and Ethena CEO Guy Young.
“Most fixed income is like spreading risk in different formats…basically just slicing and spreading risk,” Young said during a panel at the Digital Asset Summit (DAS) in New York. “This piece of DeFi was probably the least featured two years ago.”
Until recently, crypto users primarily traded tokens or borrowed against them, often seeking high and unpredictable returns. New tools make it possible to secure returns, even in a market known for its large fluctuations.
“What you’re doing with Pendle is providing a fixed-for-floating rate swap,” Young said, referring to a system that allows users to choose between more stable or more variable returns — similar to choosing between fixed or adjustable interest rates.
It’s not easy in crypto. “It’s very difficult to know in three months what the market will actually look like,” he said.
Kulechov said Aave has helped support this shift by providing vast pools of capital that other projects can tap into. “Aave acts as sort of a liquidity sink,” he said, helping “kickstart a lot of new products coming in DeFi.”
For now, much of the money made still depends on trading rather than traditional loans. “A lot of DeFi yield…still relies heavily on…leverage,” Kulechov said.
Over time, this could change as more real-world assets move on-chain, a process known as tokenization.
“A lot of the returns and economics will come from traditional finance,” he said.
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