Podcast Summary: The Wolf Of All Streets – "DeFi Is About to Explode – Stani Kulechov Reveals What’s Coming"

Podcast Information:

• Title: The Wolf Of All Streets
• Host: Scott Melker
• Guest: Stani Kulechov, CEO and Founder of Aave
• Episode Title: DeFi Is About to Explode – Stani Kulechov Reveals What’s Coming
• Release Date: March 9, 2025

1. Introduction

In this episode of "The Wolf Of All Streets," host Scott Melker engages in an in-depth conversation with Stani Kulechov, the visionary CEO and founder of Aave, a leading platform in the decentralized finance (DeFi) space. The discussion delves into the current state of DeFi, its growth trajectory, institutional adoption, regulatory challenges, and the future prospects of tokenization and real-world asset integration.

2. The Current State of DeFi: Boring Yet Functional

Stani Kulechov opens the conversation by addressing why DeFi might be perceived as "boring," emphasizing that its reliability and functionality are foundational strengths.

• Stani: "The reason that it isn't something that is everyone's in mind is because it just works. Things that work aren't necessarily the most exciting thing." (00:00)

Scott concurs, highlighting the shift in community focus from DeFi to more speculative ventures like meme coins and NFTs, despite DeFi's steady growth.

• Scott: "Anybody who's been in crypto for years remembers DeFi summer and DeFi being the most exciting users use case and growing market within crypto... But under the surface, DeFi is still growing." (00:21)

3. Institutional Interest and Adoption of DeFi

The conversation transitions to the impressive metrics of Aave, noting its significant growth and dominance in the DeFi lending space.

• Scott: "I just did some quick research on AAVE. You guys had an all-time high in TVL at 23.1 billion in December... Net deposits of 35 billion in 2024." (02:17)

Stani explains that while individual users benefit from holding assets, earning interest, and decentralized swapping, institutional interest is also on the rise. He underscores the role of tokenization in bridging traditional finance with DeFi.

• Stani: "The most recent development has been around the tokenization piece... giving programmatic access into that value." (06:21)

4. Competing Platforms in Tokenization and Real-World Assets (RWA)

Scott raises a critical point about competition within the tokenization and RWA space, mentioning platforms like Maple Finance that specialize solely in asset tokenization.

• Scott: "How do you as Aave... compete with the platforms that are native to that?" (09:44)

Stani responds by clarifying Aave's unique position in allowing tokenized assets to be utilized within the DeFi ecosystem, enabling users to earn interest or use assets as collateral.

• Stani: "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." (10:15)

5. Aave's Competitive Edge and Interest Rates

A significant portion of the discussion focuses on Aave's interest rates, which Scott observes are lower compared to other platforms offering higher yields.

• Scott: "Supply and borrowing rates... you're seeing 2% on Ethereum, 4% on Tether, 0.02% on Bitcoin." (12:38)

Stani explains that Aave's rates reflect the most transparent and average rates across the DeFi ecosystem, emphasizing safety and reliability over speculative high yields.

• Stani: "We're taking the most transparent approach of interest rates and trying to show what exactly you get on every block." (13:10)

He further highlights Aave's resilience during market downturns and its multi-network deployment, ensuring stability and security for users.

• Stani: "Aave protocol isn't only deployed on Ethereum, but across multiple layer two networks... the whole system proved to be resilient across all these networks." (15:47)

6. Resilience of DeFi vs. Centralized Finance

The discussion underscores DeFi's robustness compared to centralized finance (CeFi), especially during market crises. Stani recounts how Aave handled significant liquidations smoothly, contrasting with the collapses of centralized platforms like FTX and Celsius.

• Stani: "Aave was able to eat all this market share... everything worked exactly as it should have." (18:02)

Scott agrees, noting that DeFi's ability to maintain orderly operations during financial turmoil should be a testament to its superior infrastructure.

• Scott: "Platforms like AAVE and DeFi in general just had orderly liquidations and kept on ticking and everything worked exactly as it should have." (18:39)

7. Growth Potential and Path Forward

Looking ahead, Stani categorizes DeFi's growth into three main areas: crypto assets, stablecoins, and tokenized securities. He envisions a future where DeFi becomes the backbone of global finance, integrating seamlessly with traditional financial systems through tokenization.

• Stani: "We're big believers that all these crypto assets and networks will onboard the population... tokenization will definitely help." (21:27)

He emphasizes that the true potential lies in tokenizing all forms of assets, enabling global access and programmable infrastructure for financial activities.

• Stani: "I think crypto by itself and crypto assets is not enough. We have to go and tokenize everything and Aave will be the backbone of all of these." (22:47)

8. Regulatory Environment and Its Impact

Regulation remains a pivotal theme, with Scott and Stani discussing its dual-edged nature. While necessary for clarity and safety, excessive or ill-crafted regulations can stifle innovation and increase entry barriers.

• Stani: "Regulation is actually something that is welcome because it helps to actually clarify what is safe to do... but the devil is in the details." (27:30)

They touch upon the concept of "safe harbor," advocating for a gradual decentralization process that allows protocols to mature without immediate regulatory constraints.

• Stani: "Start from somewhere and over time, as you create resilience, you can start decentralizing the system." (32:19)

9. Aave Token and Value Accrual

Scott probes into why Aave's token price doesn't always align with the platform's success and utility. Stani attributes this to the broader crypto market's focus on speculative attention rather than fundamental value.

• Stani: "There's a lot of attention in things that are very short-sighted, but eventually what is going to take off is what has the highest utility for the users." (37:55)

He remains optimistic that as DeFi's utility gains recognition, the token value will naturally follow, driven by genuine use cases and user adoption.

10. Meme Coins and Their Impact on DeFi

Addressing the prevalence of meme coins, Stani expresses concern over their speculative nature and high failure rates, which can deter potential users from engaging with more functional DeFi platforms like Aave.

• Stani: "98 or 99 point something percent... users are actually losing on meme coins... it creates more losers than winners and that might actually set back users." (46:28)

He advocates for a return to building fundamental, utility-driven projects within DeFi to foster sustainable growth.

11. Final Thoughts: User Retention and Future Outlook

In concluding the conversation, Scott inquires about user retention on Aave. Stani highlights that while Aave may not have daily active users in the traditional sense, its services foster long-term engagement through reliable yield generation and asset management.

• Stani: "It provides a long lasting use case... we're excited for anyone that is coming on chain and also making that easier for users." (49:08)

Scott notes that stablecoins and DeFi applications like Aave serve as gateways for broader financial participation, driving continuous user growth.

12. Timestamps

For reference, notable quotes are timestamped as follows:

• [00:00] Stani discusses the reliability of DeFi.
• [00:21] Scott contrasts DeFi with other crypto trends.
• [02:17] Scott highlights Aave's growth metrics.
• [06:21] Stani elaborates on institutional interest and tokenization.
• [09:44] Scott questions Aave's competition with native tokenization platforms.
• [10:15] Stani explains Aave's role post-tokenization.
• [12:38] Scott raises concerns about Aave's low interest rates.
• [13:10] Stani addresses the transparency of Aave's rates.
• [14:19] Scott questions the attractiveness of lending on Aave.
• [15:47] Stani emphasizes Aave's resilience across networks.
• [18:02] Stani recounts Aave's handling of market downturns.
• [18:39] Scott praises DeFi's stability during crises.
• [21:27] Stani categorizes DeFi's growth areas.
• [22:47] Stani discusses the importance of tokenizing all assets.
• [27:30] Stani talks about the impact of regulation.
• [32:19] Stani advocates for gradual decentralization.
• [37:55] Stani on token value aligning with utility.
• [46:28] Stani expresses concerns about meme coins.
• [49:08] Stani on user retention and Aave's long-term utility.

13. Resources and Further Engagement

Listeners interested in exploring Aave and engaging with its community can visit Aave.com for more information. Additionally, Stani Kulechov is active on Twitter and Lens Protocol, where he shares updates and insights.

Conclusion

This episode offers a comprehensive exploration of DeFi's current landscape, its foundational strengths, and the challenges it faces amidst speculative trends and regulatory scrutiny. Stani Kulechov's insights provide a clear vision of DeFi's potential to transform global finance through tokenization and institutional adoption, underscoring the importance of building resilient and utility-driven platforms like Aave.