- Our DeFi Dissected article series aims to inform the DeFi community at large of the strengths of UniLend by comparing it with other great DeFi protocols. Today we’ll look at a very popular cryptocurrency money market, Aave.
- Both UniLend and Aave offer a community governance mechanism.
- UniLend offers permissionless listing for any ERC-20 asset, and has spot trading functionality, whereas Aave does not.
- Both UniLend and Aave allow users to borrow and lend cryptocurrencies. However, Aave has fixed and variable interest rates.
- UniLend is a permissionless decentralized money market (incorporating lending and borrowing) and exchange, whereas Aave functions solely as a decentralized money market.
At Unilend we realize that a strong community is the backbone of every project. To promote the spirit of community we decided to create the DeFi Dissected series. The DeFi Dissected series aims to keep our community well informed about UniLend and the DeFi market as a whole. Having a well informed community is very important for us because we want people to know the value of UniLend and how it differs from existing solutions in the market.
The method we use to inform our community about the distinctive features of UniLend is examining a different great project in DeFi and comparing it to UniLend. In this installment we’ll be comparing UniLend to Aave.
Aave is one of the largest cryptocurrency money markets, playing a prominent role in the world of decentralized finance. UniLend is also going to be a cryptocurrency money market, however it will operate in a completely different manner compared to Aave. To further accentuate the differences between the platforms, UniLend will also provide a decentralized exchange within its platform.
One of the big things that we will like to mention in regard to Aave is that they have been doing excellent work in connecting different DeFi platforms on Ethereum. We think Aave’s work on connecting and promoting operability among different DApps in DeFi is very commendable. It shows that by working together the many projects in DeFi can achieve a lot more.
UniLend Distinguishing Factors
The most important difference between UniLend and Aave is the fact that UniLend will provide a permissionless listing mechanism, whilst Aave does not. By leveraging permissionless listing, UniLend will enable the listing of any ERC-20 token. Aave, on the other hand, only offers a very limited array of cryptocurrencies for borrowing and lending.
Permissionless listing is a very valuable tool that can empower all the other functions available on UniLend whilst unlocking DeFi functionality for the vast array of Ethereum-based assets which are currently excluded from DeFi.
UniLend will offer a decentralized exchange along with a money market. Users can utilize UniLend’s DEX to spot trade, and supply liquidity for various assets. Aave, along with most of the other existing decentralized money markets, does not offer spot trading functionality.
Lastly, UniLend plans on exploring interoperability with other blockchains, which is something that distinguishes us from Aave and most of the other projects in decentralized finance. Being interoperable with other blockchains will enable UniLend to offer all our services on several different blockchains. This will enable UniLend to become a bridge that connects DeFi users from various networks.
Aave Distinguishing Factors
Aave offers its users with both variable and stable or fixed interest rates, which is something very unique among cryptocurrency money markets. Some users, especially those that appreciate stability, will most likely appreciate Aave’s stable interest rates. In comparison, UniLend will not offer any fixed interest rates because we want the market to be free to decide all interest rates. At UniLend we realize that many in this space value the free market, therefore we do not want to interfere with it by setting up any fixed interest rates.
Similarities Between UniLend and Aave
UniLend and Aave are both decentralized money markets, which is perhaps the main thing the two platforms have in common. Anyone can utilize UniLend and Aave to borrow and lend cryptocurrencies anonymously without having to create an account.
Both UniLend and Aave will provide their communities with a community governance mechanism. The community governance mechanism is fulfilled by utilizing the platforms’ native tokens.
Lastly, similar to Aave, UniLend will also allow for the tokenization of assets. Tokenizing assets is a great way for users of both platforms to fully take advantage of all the different yield farming opportunities in the decentralized finance space.
As mentioned earlier, Aave is highly focused on connecting different DeFi protocols on the Ethereum blockchain; they do that by tokenizing assets deposited on Aave. UniLend will also connect different projects on Ethereum by tokenizing assets as well. However, we would like to praise Aave, since they were one of the first projects to promote interoperability among Ethereum-based DeFi platforms.
The way it works is if you were to deposit any tokens on Aave, you will get a derivative of that token backed by the tokens you deposited. For example, if you deposit USDC, you will get aUSDC in exchange for the USDC. You can retrieve your USDC whenever you like by simply withdrawing it from the platform, and the aUSDC will be reverted to USDC. However, you can also take that aUSDC and utilize it on different DeFi protocols.
Conclusion: Accelerating the Advancement of DeFi
It’s important to understand that the DeFi Dissected series was not created to undermine any other platforms in this space. In fact, its aim is to examine the leading DeFi protocols to highlight the unique offerings each one has to offer. We believe the unique attributes of each of the platforms in this space should be celebrated, because it shows just how far this space has come.
We also appreciate all the existing decentralized money markets in this space for the excellent job they have done at promoting and expanding the decentralized world. At UniLend we want to join all the other platforms in this space and further expand this exciting new market by catering to our particular niche.