Is it worth arguing whether Aave is going to Solana?

Author: shu , BlockBeats

Yesterday, Virtuals Protocol announced that VIRTUAL tokens can now be traded on the Solana chain, and its official LP is now available on Meteora and has been preparing for Virtual Protocol's Launchpad on the Solana chain. Meanwhile, Nansen CEO Alex Svanevik tweeted when Aave will be available on Solana, and tagged Aave’s team members and Solana founders, among others.

But the comment section of this tweet has become a debate section for Solana Gang and Aave fans. To look broader, this is also a dispute over the market share of the Ethereum ecosystem and the Solana ecosystem in specific application fields.

A "war of words" about lending agreements

Kyle Samani, partner of Solana's milk king Multicoin, commented on Kamino, a DeFi lending agreement for Solana ecosystem, intended to indicate that Kamino is the Aave of Solana ecosystem.

Svanevik replied that Aave is 10 times larger than Kamino, "If Aave users can easily switch links, it would be a huge TVL release."

But Solana's founder toly and foundation chairman Lily Liu don't think so. Lily said Kamino's products were better, and then proudly said, "Today's metrics do not represent tomorrow's performance." Toly said that she supported a local team focused on the Solana mainnet, as a long-term investment, more distracting than supporting a distraction. The chain team is wiser and directly extinguishes the possibility of Aave coming to Solana.

Under the sharp evaluation of Solana Eco, supporters of Aave and even Ethereum Ecosystem are not willing to lose.

Aave founder Stani opened fire directly, saying that the current situation of Solana DeFi is to copy Aave's old technology, paste a semi-finished UI, and also restrict UK users to use. Although Stani is talking about Solana DeFi, anyone with discerning eyes knows that he is targeting Kamino, who is also a lending agreement.

So toly sent out the DeFiLlama interface of Aave and Kamino, indicating that Kamino's TVL is 1/8 of Aave, but its revenue is only 1/2.5. "I don't understand why Aave is a better product, and if you can't squeeze out revenue, TVL is just a cost."

Stani also responded sharply that Kamino's USDC reserve factor (i.e. the proportion of the platform extracted from each transaction or fund pool) is 15%, while Aave is only 10%, which means that it withdraws more fees from user fund pools. . Stani believes that this is a manifestation of the current lack of competition in the Solana ecosystem, resulting in weak bargaining power and higher fees when choosing the DeFi platform, and ultimately the user will pay for it.

Alex Svanevik, the main leader who triggered this "war of words", has added another fire at this time. He said that Solana has surpassed Ethereum in multiple key indicators, including the number of active addresses, transaction volume, DEX transaction volume and total Gas fee income. However, on TVL, Solana still fails to surpass Ethereum. In view of this, the most direct strategy is to attract Aave, the number one application on TVL on Ethereum, to deploy it on Solana, thereby further enhancing the competitiveness of its DeFi ecosystem.

Some people questioned this statement in the comments section because Aave deploys on Solana will not create TVL out of thin air. Svanevik explained that in order for Aave's deployment to prevent Solana TVL from growing at all, the following two conditions must be met:

1. Aave's current TVL has no funds moved to Solana at all;

2. No new TVL is added to Aave on Solana.

However, Aave has successfully attracted $20 billion in TVL, so Svanevik believes that Aave should be moved to Solana, which makes people unable to tell whether Svanevik is Ethereum maxi or Solana maxi.

The cost of trust is higher than anything else

There is no doubt that Aave is the core DeFi application of the Ethereum ecosystem, which together with Uniswap, Lido, etc. constitutes the core structure of Ethereum DeFi. Some people in the community also question why Ethereum's top DeFi applications miss out on an ecosystem with unlimited potential. . Putting aside technical factors such as code, the reason why an application chooses not to migrate to a new ecosystem is the same as those who choose to expand the ecosystem, which is to achieve incremental development.

Virtuals Protocol has expanded to Solana, with a broader user and liquidity base, and Aave does not go to Solana, so it must also consider the competitive landscape. Solana's current DeFi section has become increasingly perfect. The lending agreement alone has multiple late-stage teams such as Kamino, marginfi, and Save to compete for market share. Aave's expansion cost will be higher than expected.

More importantly, Aave's existing brand image will also cause variables due to expansion. As someone in the community said, "If a person with seven to eight digits wants to get higher than off-chain benefits while ensuring security, then ten out of ten times will recommend them to Aave on Ethereum instead of Solana. DeFi on chains such as Tron and Celestia.

Security is the foundation of a lending product. Only when you have sufficient security audit, experience in dealing with hacker attacks and mature contract designs to support it, will large capital investors and ordinary users choose to park their assets here. Therefore, the reason why Aave can become one of the most influential lending platforms on Ethereum is inseparable from the developer ecosystem, security audit cases and huge and mature capital pool that Ethereum has long accumulated.

The financial attributes of DeFi determine that "the longer you run, the greater the stickiness." This stickiness is rooted in deep trust in the security and stability of product contracts. This "trust cost" is not only about considering the speed, performance and transaction costs of a new chain, but also includes the degree of infrastructure improvement, the coverage of audit companies, the community's alertness to potential security vulnerabilities, and Can ecological response capabilities be obtained in a timely manner under extreme conditions?

Looking back at the development history of Ethereum DeFi in recent years, many projects have experienced major vulnerabilities or security incidents, and even suffered losses of hundreds of millions of dollars. It is through repeated responses and iterations that the security barriers of Ethereum DeFi have been gradually built. The reason why Aave is widely favored is because it relies on this layer of security moat that makes it the first choice for large-scale users, especially institutional players. In other words, most people regard Aave as synonymous with "lower risks and considerable returns", especially for users with a capital volume of millions or even tens of millions of dollars. Security and stability are always ahead of incremental returns.

In contrast, Solana, as a high-performance Layer1 blockchain, does have certain advantages in transaction speed, Gas fees, etc. But from the perspective of lending agreements, the core of financial applications lies in the "risk-to-return ratio". Fast speed and low cost are of course important, but if you cannot provide enough proven security and record of combating attacks, such advantages are often not enough to support the long-term migration of large amounts of liquidity in the DeFi track. Especially for lending business, it has to face multiple risk factors such as liquidation, interest rate fluctuations, contract audits, and hacker attacks. Once a problem arises, the brand image and trust accumulated by the platform over the years will be instantly disintegrated, and this "trust cost" is far from More expensive than the technology itself.

Looking further, even if Aave really chooses to expand to Solana, it may not necessarily bring about the so-called "increasing out of thin air" TVL. Funds are profit-seeking and rational. The $20 to 30 billion TVL accumulated by Aave on the Ethereum main network is not willing to automatically split and move it to another chain. On the contrary, due to the huge differences in the underlying technology stack, development language and even community culture between each chain, Aave needs to invest a lot of time and resources to adapt and audit, which in itself means extremely high expansion costs and management risks. What's more, the existing local lending agreements on Solana are becoming more mature, and Aave does not have the first-mover advantage of being ahead of the market.

Therefore, under the premise of having a triple moat of security barriers, brand and capital scale, if Aave insists on expanding to Solana on a large scale, it may not be the wisest choice. After all, in the long marathon competition of DeFi, winning users' trust and security awareness is the most difficult core barrier to shake.