The Wolf Of All Streets - DeFi Is About to Explode – Stani Kulechov Reveals What’s Coming

Episode Date: March 9, 2025

DeFi isn't dead—it's just working better than ever. In this episode of The Wolf Of All Streets, we sit down with Stani Kulechov, CEO of Aave, to break down why DeFi is still booming under the surface, how institutions are quietly moving in, and why boring and reliable beats hype and failure every time. If you're wondering when DeFi will reach its full potential and whether meme coins are just a distraction, this conversation is a must-watch. Stani Kulechov: https://x.com/StaniKulechov ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► 🔥 LBANK Exchange - No KYC Required! Claim up to 50% trading bonus! Join today & get rewarded! Start trading to claim up to 50% in trading bonuses!! 👉https://www.lbank.com/activity/ScottMelker-Cashback?icode=4M3HD ►► Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://archpublic.com/  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. Use code '10OFF' for a 10% discount. 👉https://tradingalpha.io/?via=scottmelker  Follow Scott Melker: Twitter: https://x.com/scottmelker Web: https://www.thewolfofallstreets.com/ Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #DeFi  Timecodes: 0:00 Intro 1:06 Is DeFi Still Growing? 2:30 Why No One Talks About DeFi’s Success 5:08 DeFi Needs to Be Boring 6:22 Who’s Really Using DeFi? 9:08 Institutional Money & Tokenization 12:22 DeFi vs. High-Yield Ponzi Schemes 15:38 Aave’s Risk Management Explained 18:09 DeFi’s Big Win Over CeFi Failures 21:19 The Road to Trillions in DeFi 23:55 How Tokenization Changes Everything 26:52 DeFi, Regulations & Future Challenges 31:21 What Regulators Don’t Understand About DeFi 34:59 Decentralization Takes Time 37:50 Why Aave’s Token Doesn’t Reflect Its Growth 40:19 How DeFi Could Explode Overnight 45:33 Banks Have No Idea What’s Coming 46:31 The Meme Coin Casino vs. Real Utility 48:27 What Will Push DeFi Adoption Next? 50:07 Where to Follow Aave & Stani The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

That's an interesting question. I would say that's and most of the innovation is happening on the application protocol infrastructure, not the underlying blockchain network and people can make mistakes and that's why you have blockchain with things like financial infrastructure. So something that is everyone's in mind is because it just works. Things that work aren't necessarily the most exciting thing. I'll take boring and working rather than exciting and broken. Anybody who's been in crypto for years remembers DeFi Summer and DeFi being the most exciting use case and growing market within crypto.

Well, now we have meme coins and speculation and NFTs and all the other things that have captured people's attention, but under the surface, DeFi is still growing. You could argue that it's still booming and is taking along working as intended. When will DeFi finally reach its promise? Will it become a parallel rail to traditional systems or replace them entirely? There's no better person to have this exact conversation with than Stadi

Hulachov, the CEO and founder of Aave. For those who don't know, Aave dominates the DeFi space. He knows this stuff better than anyone else. You must listen to this conversation. This has been an interesting cycle to say the least for crypto. I think we have massive interest in Bitcoin, certainly from the institutional side, and the crypto degens and natives seem to have gone completely to the meme coin casino. And it seems like that's been a barbell and there's been very little in the middle, right? There hasn't

been a huge focus on utility. But while that's been happening, I just did some quick research on Aave. You guys had an all-time high in TVL at 23.1 billion in December. That may have even changed since now. You have 45% of the DeFi lending space on your platform. Net deposits of 35 billion in 2024. How come people aren't more excited about DeFi right now when you look at these astounding numbers? I do think it's quite interesting because a lot of users who have been in this space for quite a long day, they understand the significance of DeFi. And from the user perspective, so being able to hold your own assets, being able to earn interest on your assets, being able to swap without using a centralized exchange, being able to just hold a stable value without an intermediary. And this kind of power blocks that DeFi brings

are familiar for people who've been in the space for a while, have seen the DeFi summer a few years ago, and the kind of like growth of DeFi. But I think that's a newer user base and today the way you are coming on chain is much more diverse at the moment so while DeFi works and Aave works really well it's a revenue generating DAO it's profitable it's generating over 100 million of revenue annually, which is amazing from like, if you consider how hard it is to create a profitable, successful startup, think about how hard and difficult it is to create and participate in a profitable decentralized organization, way much complicated and harder. But Aave and a couple of other DeFi protocols have been able to do so.

And I think it is big, but the reason that it isn't something that everyone's in mind is because it just works. Things that work aren't necessarily the most exciting thing. The yield on Aave might be exciting. One day it might be very high, the next day might be a little bit lower but still competitive. So there's different drivers at the moment in our space that are kind of like competing on attention. So yeah. I just laugh when you say that DeFi is boring because anybody who's been here a while knows that DeFi was the Wild West for a very long time in crypto. Only in this industry could we think that DeFi is boring. Yeah, I mean, the boring part is actually really good because we've seen a lot of things happen, you know, after DeFi Summer, we've seen FTX, we've seen Bridge hacks, Smart Contact hacks, and if you look at today and where

Aave is over all of these years and being able to withstand these various price movements, liquidations, and all these kind of headwinds, it's in a really kind of like a good place. In the sense that you want DeFi to be a little bit boring you want it to be resilient you want it to be a system that you can rely with your own wealth and your own funds and and and generate that kind of like a wealth and capital protection so so there's far more things today available on chain that are extremely exciting, but at the same time, they might not be the best thing for the users.

I'll take boring and working rather than exciting and broken. So I think it's just a statement as to how much DeFi has matured over the years. And anyone who's been here, we know that that means people get bored with it and move on to other things. It begs the question, who accounts for these incredible numbers? You have $23 plus billion in total value locked. That's a lot of money. That can't just be average people all around the world depositing.

I'm assuming there's some institutional interest there. So how is it growing? Who's using it? And how do you see, I guess, that in the future as we see this institutional adoption of crypto? How do we get them into DeFi? Yeah, it's really interesting when you think about the whole user base of the protocol. The way the protocol works, it's an on-chain application, essentially, transparent. Everyone can actually see what's happening there.

It's end-to-end auditable. But what we don't really see is exactly who are the actors behind of these transactions, which is good for privacy. But on the other hand, based on our research and discussions with users that come to us, we see a lot of day-to-day users being like just like you Scott or me that are in the space and they want to earn yield, protect their wealth and being also able to use their cryptographic assets such as their let's say bitcoin in wrap form or ethereum as a collateral borrowing against that as well and providing getting access to these financial tools. So the finance goal typically might be another type of investment opportunity.

It might be down payment on a mortgage. It might be buying a new car. It's actually in many cases something that ties back to real life. So in one way to think about it is that the Aave protocol is something that is running on chain, enabling these opportunities, but they actually get sourced, the destination of usage of these funds are connected into real life, which makes it amazing because it works globally in a resilient way. In terms of the institutions, we are seeing more and more bigger accounts.

That also kind of like gives us some understanding that these are more institutional users. We talk to more institutionals today today so there's some more actually usage now in that field. A lot of these institutions are very crypto driven so they might do already strategies in crypto and Aave is kind of a place to them to park capital or unlock these big holdings that they might have for new types of strategies. The most recent development has been around the tokenization piece. So taking value that is already existing in the traditional financial system

and putting that value on chain and then giving programmatic access into that value. So I think that piece is something that is going to grow and we're seeing more initiatives in the Avidao, which is a, you know, anyone can come to the Avidao and create a proposal and basically propose some sort of interesting idea that can go all the way to execution. And let's say that RWAs and tokenization isn't really a new thing. A lot of these stable coins are effectively tokenized investment funds or tokenized

of pooled funding into treasury bills or these types of low risk investments. But that is a really, really growing space at the moment. And how do you, you know, as Aave in the tokenization and RWA space, how do you compete with the platforms that are native to that? That's their core competency. That's what they do. They don't have other types of lending.

I'm friends with Sid Powell, you know, from Maple Finance, for example, right? That's pretty much their singular focus is, you know, the tokenization of these assets. Do you find people going to them or do they come to Aave for that as well? And what's the sort of interplay between the platforms? Yeah, tokenization is the kind of like a primary act of getting value on chain that doesn't natively exist there.

And where Aave comes into play is that how do you actually can use that value in the form of earning interest on that asset, particularly, or using that asset as a collateral to borrow another asset. So at that point, we're not in the part of the actual tokenization process. And we're more kind of like the next step of once you tokenize these assets and they exist on let's say Ethereum, what can you do with that asset?

What do you do next effectively? Being able to hold something that provides you value of chain and being able to capture additional value on chain is a big value proposition. Being able to also use that value to unlock capital short term is also a big value driver. So all these tokenization use cases that are happening now on chain whether it's through credit tokenization, what you for example mentioned, or bringing securities on chain or any other form of asset tokenization. That is an actual opportunity for Aave to come and create a liquid market of lending essentially. So I think the more of this tokenization area is going to grow in the future,

the bigger opportunity it is going to be in Aave. And the way I see it is that we won't see one big market where all these assets are added in the same place. But the actual beauty of the Aave protocol is that it's a set of financial infrastructure that you can deploy, add your own parameters into that, choose the governance effectively, so you can choose Aave DAO to govern these markets and have peculiar assets there. And I think that's the key of the system, that we will see different types of markets, tokenized assets used as a collateral. And in that way, it provides the utility

for everything that is coming on chain in terms of value. I'm looking at the dashboard and Aave for the rates. So supply and borrowing rates, obviously. It seems that it's a much safer place to earn yield, but it's much lower than what's promised across DeFi where you see 15%, 20% yields, Athena and all these other sort of platforms that are offering these massive yields. I'm seeing 2% on Ethereum, 4% on Tether, 0.02% on Bitcoin. So why would someone deposit Bitcoin for a 0.02% yield? Yeah, the way all of it works is that we're showing the spot rates.

So we're taking the most transparent approach of interest rates and trying to show what exactly you get on every block essentially. So if you go maybe two months back in the time, you could get 9 to 10 percent on USDT and USDC on Aave. So these rates fluctuate based on the overall demand of DeFi rates across the whole ecosystem. So for example, if there is more demand on Athena, that causes more demand also in Aave because that's a way to actually leverage those positions or any other investment opportunity in DeFi. So in some certain ways, Aave is basically the kind of like average rate of what you can earn in decentralized finance. Now in this kind of an environment where you have a lower rate, it means it's actually

favorable for the borrowers. Yeah, that's crazy. That's what struck me. That was going to be sorry to interrupt. That was my next question. Yeah. Yeah. I mean, who would lend it, I guess, at 0.02%, but you can borrow at 0.42% on your wrapped Bitcoin. Yeah, exactly. That's exceptionally low.

And on top of that, I think one important thing is that when the rates are low, it actually introduces a new opportunity, which is the RWAs. So bringing these assets on chain, there's actually a viable economical opportunity to borrow liquidity against that because there are people who are willing to pay that rate. But I think the way that DeFi works today and overall on-chain interest rate markets

is that the moment there is additional traction for let's say derivatives markets, bitcoin lending, ethereum lending, overall the market rates are going to go up down the line. And this kind of like a pattern will follow until the market is big enough that it's not focusing only on these types of use cases in overall. And you have to have relatively high LTV. Right. So I'm looking at the WBTC as we talk, it's 73% max LTV liquidation threshold, 78% liquidation penalty, 5%. So it's very, very safe. You would need to see the move on Bitcoin, you would need to see to get liquidated would be relatively astounding at this point.

Exactly. And there's been occasions where the market has fluctuated quite a lot and the prices had dropped significantly. We don't need to go that much back in time when the markets went down. And in a one single time period, Aave liquidated over 200 million words of positions on chain.

And that is something that is super remarkable because it means that we were able to build something that is extremely resilient. And Aave protocol isn't only deployed on Ethereum, but across multiple layer 2 networks. So we have in total 13 different network deployments, market deployments at the moment, which means that the whole system proved to be resilient

across all these networks with their liquidity involved. And the reason for that is that within the Aave DAO, there is active risk management, meaning that when you have a dynamic environment, which is financial markets, you can't really have static conditions. So for example, if you today set a static condition of loan to value ratio, how much you can borrow against your Bitcoin or Ethereum, or even interest rates, how much you can actually earn from that type of a business model, you're locking yourself into conditions in an environment that is changing in the future. So in the Aave DAO these parameters are ongoing basis

changed and improved by the risk managers that are service providers for the DAO. And that's why the whole system works really well plus on top of that you can come, anyone can audit the system, can come into the governance forum and actually create better proposals if they don't like the ones that are there, provided by other community members, for example. And I think that's the beauty of building, you know, decentralized money system where everyone has the same access to participate. 200 million is quite a bit on chain. As you mentioned, I think one of the big stories that we'll somewhat missed when we saw the collapses of Voyager and Celsius and bald and FTX and all of them was that this was basically human error to some degree. I mean, some of it was outright fraud, but a lot of human error,

C-Fi obviously completely collapsed. We had bankruptcies and in background, platforms like Aave and DeFi in general just had orderly liquidations and kept on ticking and everything worked exactly as it should have. That should have been the biggest advertisement for DeFi ever. Yeah. And so I can share an interesting story. So when I started building Aave, it was called Eidland back in the days. It was 2016 and 2017. And my idea was to build this whole system on chain.

So how do we get lending and borrowing on chain collateralized and effectively creates global interest rate markets for all relevant assets that are going to be on chain. And at the same time, we saw, you know, we saw sales use, we saw salt lending, probably one of the first ones. We saw BlockFi, we saw Genesis Lending. So we saw a lot of these companies coming into the market offering the exact same thing but managed centrally by a company. Actually everyone kept telling us that why are we doing it this way? Why are we building on chain? Because we could scale our business faster. We can take dollars instead of stable coins. Stable coins weren't actually a thing on chain until 2018 at some point.

So it was very early on, but we kept actually building towards this direction because we think that smart contracts can provide something really valuable, which is guaranteed execution. So the smart contracts will execute exactly the way that you program and you can govern how those functions can be changed in the future together with a community. You have the full transparency. The whole system is auditable. Not just of it but anything that is on chain. You can see the whole exposure across multiple protocols and so forth. So in overall, after all, with all these centralized businesses going down, what we realize is that the decentralized lending markets of it actually was able to eat all this market

share. And since ever then, there hasn't been a centralized business entering into the space and providing lending and borrowing at the same scale as Avidos because it doesn't make any more sense to do so because you can get everything and more resiliently from the Avid protocol. Yeah, so being that we've seen massive growth but obviously to be competitive to, you know, TradFi, we would need to see billions and billions and billions, hundreds of billions, if not trillions of dollars in value being locked into DeFi. So what's the path at this point to increasing these already impressive numbers, but to be on the level that we would

see in legacy markets. Yeah, the way I categorize the growth is that other can grow based on the asset growth on chain. And that means that there's a limited capacity for crypto assets to grow. Obviously, crypto assets, they will grow significantly. We're big believers that all these protocols, underlying networks will onboard the population to actually... There's going to be a big transformation from... The same way we had transformation of finance from Like the same way we had like transformation of finance from, you know, play boards to paper or paper to digital.

And now we will have from digital to on chain. And what I think is going to happen is that these crypto assets and networks will keep growing and be the whole backbone of, of finance. But the second category of assets that will be significantly even higher, um, is just purely cash, stable cash in stable coin forms. And then the last more category that kind of, uh, is part of stable coins as well, depending how do you want to, um, categorize is, uh, securities that will come on chain as well. Tokenized stocks.

Exactly, exactly. And tokenized stocks are interesting, but even more interesting are the businesses and the stocks that people don't really have access. So like the reason Tesla is or any other stock that is listed on a publicly traded exchange is somewhat interesting is on chain because I maybe have programmatic access and it's easier for me to buy from non-constellular perspective, but it still exists there. So people have access to it, but there's a lot of really amazing companies out there that aren't traded publicly, are still private and probably are going to be in private because it brings them

better execution and environment. And providing that access to everyone is really, you know, everyone can be in the part of the future of a company that will change the world effectively. That's why I think crypto by itself and crypto assets is not enough. We have to go and tokenize everything. And Alve will be backbone of all of these because we need interest rates markets, we need the ability to unlock capital and do dude, in a, in a, in the most resilient fashion. What if BlackRock wants to just earn some yield on their dollars,

you know, their cash treasury or Apple? What if Apple says, I want to participate in DeFi. I want to take our pile of billions of dollars of cash and just passively earn a yield, although I'm sure that they're actually doing that probably with short-term treasuries. But, but you know, let's pretend in a world where they become interested in DeFi and they have this massive pile of cash, can they come on Aave and do that? And how do we convince them that this is the way to do it? They can do and they can execute as of today. And over time time that execution environment becomes more easier because

the thing is that Aave provides as a base principle is anyone can connect and basically start supplying assets, supplying stable coins. And today there's more and more options how they get from Fiat to Stables. There's still problems with debanking. I just got debanked actually today. Oh my gosh. Not in the United States though, presumably. No, this was in Europe, but it's still, it's 2025 and it's still happening. So it's really, it's not great, but it just showcases like how bad the financial system is that if you have a business and you want to be an entrepreneur and you want to

found something and you know, you, you have a risk of losing the lifeline of paying the people's bills that are actually working for you and contractors and even collecting revenues. There is so much work to do still here. But in case of these bigger companies, they have more and more better access. And I think over time, the fintechs will understand that there's a huge opportunity here to actually plug into DeFi. A lot of the revenue that is coming into fintechs today isn't actually the transaction volume.

It's not that their client bases are exponentially growing. It's the assets that they're managing of their users. So they're doing that in the existing traditional financial mechanisms and infrastructure. But in the future, they could do that in DeFi. So what I think in the next couple of years, we're gonna see more and more integrations into the FinTech ecosystem, like integrating DeFi into the existing FinTech ecosystem.

And that's where also these bigger companies come because they can use a trusted platform as an example, or a trusted broker that helps them. You obviously, you're decentralized, you're a DAO, so it's not like you're a company that's going out and seeking regulation in various markets like a centralized exchange or other protocols would have to. But I would imagine there's still some regulatory challenges to growth based on this sort of wide breadth of different regulatory regimes around the world. Some places where it's still the Wild West, you can do whatever you want.

Some places with extremely strict regulation where you might be entirely banned. And then places perhaps like the United States where it remains to be seen, but clearly is thawing in the environment is improving. So how much does regulatory environment and change affect your business or even your adoption day to day? I think significantly because the regulation itself by what it is, it defines of what we can do and can do as a not just as a company who is contributing to the whole ecosystem within DeFi and Web3. So the rules are really important. Even though we're building and these networks are decentralized, so they can operate as long as there's incentives for validators to run these networks,

there's still a lot of effect from the regulation. And I think regulation is actually something that is welcome because it helps to actually clarify what is safe to do, what are the rules that we all need to follow. But the devil is in the details in the sense that wrong type of regulation can actually kill a lot of innovation or increase the barrier to entry so high that you can't really innovate on a level such as a startup. And I do think that, for example, peer-to-peer lending crowdfunding was really big a few years ago and the space kind of like created a lot of opportunity. We saw a lot of innovation, but was quickly regulated in the UK, in the US, and across Europe. And after that, we basically

in the US and across Europe. And after that, we basically saw that the cost of actually being able to provide these services and platforms increased significantly. So we didn't see any interesting innovation since then. So a lot of examples, not just from financial industry but other industries where the regulation can really put a full stop into the innovation. And I don't think it's intention of the regulator itself to stop an industry necessarily. Unless if it's... In our country it was, but yeah, okay.

Yeah, exactly. Thinking about that more of the future. But if there aren't the right stakeholders to actually, um, commenting and helping and contributing to that piece of legislation, what quickly can happen is that the nuances of, of, of, of that regulation can actually stop certain things. So now we have to think about, for example, how do we need to think about DAOs? You know, how do we need to think about decentralization? How do we need to think about smart contracts? What can be regulated? What shouldn't be regulated? And how do we leave enough space for innovation? Because one of the biggest things that Web3 has been able to do is attract enormous amount of capital,

enormous amount of talent, and create enormous amount of interesting innovation. And even there are some projects that are already entering into a stage where they're generating revenue, like the Arvid Protocol and Arvid Hour. So we need to be really careful on the actually, the detailing. And I think in US, we do have a really amazing situation in the sense that there's kind of like a progression on what will be the regulation

and different stakeholders can participate into that. There's some also positive tailwind in the UK that is looking into regulating more crypto and thinking about what pieces can be regulated, how stable coins should be regulated and how not that is coming into 2026. European Union already has MECA regulation, which establishes a lot of the ruling.

So I'm net positive as long as it doesn't kill the innovation. I agree. I laugh at the fact that SBF was kind of the guy on Capitol Hill pushing for regulation that would have massively damaged DeFi. When you look back at what he was proposing and how favorable it would have massively damaged DeFi when you look back at, you know, what he was proposing and how favorable it would have basically been to centralized exchanges

like FTX. So it makes you kind of worry about which people will be tapped to participate in that regulation, whether their opinion is based on self-interest or actually for the industry. So I still think it's touch and go. As much as things have improved, there's still a lot of landmines out there. Let me ask you, if you were regulating DeFi, what guardrails would you put in place

or what do you think would be sort of a sensible structure? From a DeFi perspective, it's really important to kind of like, give a lot of, I would would say like buffer for the community to be able to govern the rules they want to operate within the DAO. So I think that's a really key part of it. I would also like try to map out what decentralization means and where that type of a spectrum is. And, and once you reach decentralization, what that means to the project itself, to the DAO and the contributors.

And a lot of these DAOs actually are kind of like foundations. So they're aren't really real DAOs. They have some sort of legal wrapper there. And that's also kind of like a sad progression of having to wrap a DAO under a foundation because the rules are unclear. So, so that piece is the most important thing is that what happens when a project hits a certain point of decentralization and isn't operating as a business. And what that means to the responsibility

piece. Because if you have hundreds of people participate or thousands participating in a governance model, you know, is it decentralized enough that there isn't really a responsibility within the protocol or where that line basically is drawn. And I think that's fundamentally, is gonna be the biggest question for regulators to figure out now where to draw the line basically. Hester Peirce at the SEC, who obviously is now in charge of the crypto committee.

There was floated for a while to be the chairperson, but obviously has now in charge of the crypto committee there, was floated for a while to be the chairperson, but obviously has been in the minority with Gary Gensler for the past few years, has been floating that exact idea for literally years, which was called obviously Safe Harbor. Understanding that if you're going to create a decentralized protocol, it's probably going to have to start with some sort of centralized authority. And then there's some sort of scale over a three-year period, for example, where you slowly take these steps towards decentralization and you reach some goal. What you just described is like basically the perfect regulation has been proposed by

a one of the five SEC chairpeople for years. Yeah, exactly. And what's interesting about the safe hardware is that you can't really have a decentralized system in most cases from the get-go. And the reason for that is that a lot of that innovation now is happening on the application level. So you still see new blockchain networks and some sort of innovation there but that kind of area of innovation is somewhat capped and most of the innovation is happening on the application protocol infrastructure not the underlying blockchain network and that

usually means that you start from somewhere and over time as you create resilience you can start decentralizing the system. I actually think that's a good thing because you can protect the protocol, protect the users in many ways by actually holding some sort of a control on certain functions of smart contracts without fully creating like a overhead governance because governance while it's a really great way of managing a public good, it's also an overhead in the sense that if you want to make any kind of changes into the actual code bases and whatnot, you can't really do it just like that. You have a public process and you need to expose every single change that is happening

because that's executable code. So that's a rigorous process for anything. So if you're just innovating in the beginning, that type of a safe harbor will actually create a lot of innovation and also will create actually then a question at some point whether there's enough product market fit to decentralize. Why this is important as well is that we've seen a lot of projects in the past couple of years that they try to decentralize as soon as possible without any proper users, without significant signs of product market fit. And what really happens is that a lot of investors go and buy their tokens.

And at some point the value drops down and there's still no users. So you don't have that ability to take it slower and start from like a centralized path and decentralized over time. It's interesting that you talk about the token. Obviously Aave token still has done exceptionally well since inception, right? I think, you know, trading well over $200, but there was a time when it was over $600, right?

And so when you look at your metrics that I described at the very beginning of this conversation, you would think that that value would accrue to the token and the token would be trading at all timetime highs. But we have this interesting interplay where price discovery in crypto in general is generally dependent on where the attention of the community is focused. And so even when something does exceptionally well from a utility or fundamental perspective, it doesn't mean that necessarily the price of the token

goes up. So how does this value increasing eventually accrue to the token, which obviously is what the community and the people participating want to see go up? Well, I think in overall, the same kind of thinking applies to, for example, Ethereum and this kind of like a bigger undervalued projects where if you think about Ethereum and this whole idea of programmable virtual machine that everyone can use and create applications like the Arbit protocol, this is something that is needed for pretty much all finance. So it is fair to say that DeFi is the one type of a use case that has product market fit on chain.

Stable coins is another one and arguably that's also kind of a part of DeFi. So that the financial, decentralized financial infrastructure is there and few protocols like Aave and a couple of other ones have been able to establish actually profitability from that perspective. And the way I think about the valuations where I don't like to think too often, but I think it's just a question of time when the attention goes towards where there's actually most progress and what is actually keeping its value. In our perspective we have a roadmap that we're contributing into the AvaDAL

from the AvaLabs perspective and you have dozen other service providers that are contributing into the AvaDAL with their own roadmaps. It's a truly decentralized ecosystem where if you move one piece of block that revenue doesn't really drop which is very different approach than for example a traditional company. So I think that there's a lot of attention in things that are very short-sighted very short-sighted, but eventually what is going to take off is what has the highest utility for the users in all these use cases. So I think it's a question of time and my kind of like a main metric is not even TBL, but just trying to understand of actually how many users were onboarding all the time and different user personas. That's why the institutional part is really interesting. Organization is interesting

because that just unlocks a lot of that potential. You could see a doubling, tripling, or quadrupling overnight effectively if one of those gained real adoption. A whole new use case completely unlocked as you described before, there's only so much growth within crypto itself. So a whole new user base, a whole new market effectively unlocked for ways that people could use the protocol as it's already basically built. Yeah. And if you think about it, like all finance is going to be on chain. And that's not something that happens overnight. We probably, there's less than 0.00000, like a lot of zeros there. One percent of finance is actually on chain. We're talking about like a little bit over a hundred billion,

fluctuate between 100-200 billion depending on the cycles. So it's truly nothing at this point. And over time, that's why I would say that it's going to take decades to get everything on chain. It just takes to cause quite a lot of time to get from paper to digital and that transformation isn't really complete in finance. You know, there's still a lot of reliance on paper, even you have this digital infrastructure and people can make mistakes. And that's why you have blockchain or things like financial infrastructure.

So I think it's going to take three to four decades to just get this adoption going, but things like tokenization will definitely help because it allows traditional institutions to actually rethink the way of how they create value and utility for their assets. So assets in the future are not only about getting someone to invest into assets, but actually a component of a programmable infrastructure where you can make use in. What do you do with them after you invest in them? Exactly. Exactly.

So, and the reason why this is going to take decades is we're not just changing like the technical substrate of a financial system. We're changing the effectively concept of money in overall. And doing that, it's a little bit tricky, right? So we had a lot of tailwinds of regulation, and getting now more tailwind is great, but even with the best regulation and best people,

best talent working in the space, it's still going to take decades for adoption. Yeah, and the other huge aspect of that is that it's one thing to go from paper to digital. It takes a long time. It's a technological advancement. This technological advancement and transition also requires killing the largest companies in the world and all of the third party incumbents that are capitalizing from the existing system, right?

It's not like a Citadel and the DTCC and Visa and MasterCard are just going to go quietly into the night and be replaced by, right? So it might take decades just for them to figure it out and be able to capitalize it and utilize it. They'd be able to slow it down just to make sure that their interests are represented. Yeah, it's the same pattern. Obviously, this has been very difficult for even fintech companies. We saw some of the biggest fintech companies really kind of like not paying any attention into DeFi and stablecoins and now, you know, are acquiring stablecoin companies at billion dollar acquisition prices. Not in the same time. Exactly.

And then traditional finance, we do have BlackRock that is already doing things on chain. Even at Aave, we've participated in Project Guardian with JPM, which was the first kind of like a bank that did an experimentation directly on chain with DeFi or permissionless network with a permission protocol. So things are moving onwards but at some point obviously the bigger organization you are the harder it is to actually scale this because even if the so-called blockchain department or the kind of like a closet enthusiasts DeFi enthusiasts that are working in these institutions, they will have hard times convincing the rest of the organization,

especially if they're clueless. And I met so many people from bigger banks that are in a great positions and they don't have any idea what's going on. They don't know anything about DeFi. Don't understand why it's going to replace a lot of their functions and change their business completely. And they're absolutely clueless. And this is actually like the most incredible thing that I like, like if I

would work in a traditional finance and I know that my work will going to change in five years from now completely or might replace me I will be interested in that technology. I'm not saying that all these banks are gonna fully be replaced but they need to go into transformation and understand how they can tap into this ecosystem and some of the institutions are already participating in this arbitrage. Yeah it's like five guys in an office who are the blockchain department and a company with tens of thousands of people.

Yeah, exactly. And it's very exciting that they're there, but I think it just lets us know how early we still are, I think, with that level of institutional adoption. I know we're kind of running out of time, but there's one thing I definitely have to ask about. And that's been the proliferation of mean points because we're kind of running out of time, but there's one thing I definitely have to ask about. That's been the proliferation of meme coins, because we're going to talk about the prices of everything else I talked about at the beginning, but that's clearly where all the people who have been in crypto forever, who are speculators, are going to spend their time at the moment.

Right. We've seen the rise, fall, rise, fall, rise of Solana as being sort of the meme coin casino. I'm not implying that's all that Solana is, but what do you make, I guess, of the meme coin market? Do you think that's Trump coin and Libra token and a potential Kanye coin? These could be sort of top signals. We finally get a ceiling in some of the insanity ending and maybe the money flows back into things like Aave and real utility.

Or do you think that we've flown the coop on meme coins and that's where the money is going to continue to go? That's an interesting question. I would say that's the biggest problem with these meme coins are that I remember reading a statistics about pump.fund where was it 98 or 99. something percent of, was it even 99.8 point something percent of the users are actually losing on meme coins. So when you think about adoption and if you have 100, you have a group of hundred people and you know, only one or like one partially wins from that equation,

those 99 other users won't be happy. So I think there's an argument that, yeah, they will come and create a wallet. We saw that in the NFT craze, we saw, we're seeing that in this memecoin craze. We saw that when Bitcoin, Ethereum prices went up multiple times at different periods of the past decade. Those people aren't actively using on-chain.

And why would they? There isn't that many things. There's Aave, obviously that's amazing. It's not a full-built ecosystem yet. But it can definitely create more wallets, but it creates more losers than winners. And that might actually set back users. When you think about something like Aave and being able to just earn yield, that's great because that creates something better than existing traditional world, more transparent, more accessible.

There's still a lot of people that don't have even access to dollar. Uh, if, if, and of course not dollar yield. There's still a lot of people that don't have even access to dollar. And of course, not dollar yield. So that's like a major improvement as well. So yeah, I'm not that excited about meme points. I hope we don't see anything crazy. And I want to see more builders going back to building fundamentals. Is there anything that I might have missed before I let you go?

No, this is probably everything we covered. Is there anything that I might have missed before I let you go? No. Maybe you'd like to touch on. No, this is probably everything we covered. Yeah, I mean, I have to say you just alluded to it at the end, but Yield or otherwise, stablecoins have proven still to be the killer app so far for crypto. And then being able to put those to work, I think, allows people to see what's possible with all other assets. And so I think that the growth of stablecoins and people testing DeFi with stablecoins

will still be sort of the gateway drug to real world assets and tokenization, all these things. Let me ask you one more question. If 99% of the people who are getting washed out on Pumped.Fun, which we know is true, what percentage of users use Aave and continue to use it or come back or ballpark?

That's an interesting question because in Aave, you don't really have daily users. Right. And just supply and they might keep there for a year or they might be more frequent user and actually daily user but I don't have an exact number, but it's actually, in overall, it provides a long lasting use case. So you could keep your funds in Aave for a year, for longer period, shorter. And for us, we don't mind if users come and use only once or twice.

Our goal is of course, capture that feedback and improve and create a better experience and that's why we're building the Aavev 4. But in overall like we're excited for anyone that is coming on chain and also making that easier for users. What I was getting at there is it's a much stickier experience that keeps people coming back when it actually works and is boring and you make money doing it. Yeah, it. Great way to finish. Stani, where can people check out Aave, follow you after this conversation. And next conversation, we'll actually talk about Lens Protocols as well. We didn't even get there. Nice. Yeah. So you can go to Aave.com and you can find more information about the Aave Protocol and the Aave DAO,

about the Ava protocol and the AvaDAL, even participate in the community forum, Stani Kulachev on Twitter and Stani on Lens as well. Thank you so much, Stani. Really appreciate taking the time. Glad we got to do this and we will catch up very, very soon. Thanks again. Thanks, Scott. That's dope.