Stani Kulechov: Aave Will Be The Biggest Neobank In The World (And What's Next...)

Transcript

You have to keep innovating and creating new things that apply to these native crypto assets. They're asking for fast finality. They're looking to scale the L1. It really feels like the roll-ups are coming back. Resistance is neutrality of the L1. And we're actually seeing that the institutional flows value that too. >> Today's guest is Stanny Kulichav, founder and CEO of A, one of the most influential protocols in decentralized finance. Under his leadership, A pioneered permissionless lending and borrowing, powering billions in onchain liquidity and helping define DeFi as we know it. Stannie Kulachov, the visionary reshaping how the world borrows, lends, and builds on chain.

>> There's a lot to build. You have to get a whole world of credit on chain. There's bunch of problems to solve there. Welcome back to the rule. >> This is your home to learn from the biggest guests, the brightest minds at the tip of innovation. >> Our goal is to help spread the collective knowledge of everyone in our community. >> We are breaking crypto out of its echo chamber and taking it to the real world. >> Sit back, relax, and enjoy it. We are live now. Stanie is approaching in the most fashionable pants we've seen all week on Rave day. Good to see you again. Pleasure.

>> Pleasure. >> Thanks for coming. >> Welcome to the show. >> Thank you. >> And congrats on the big week, man. >> Yeah, it's been a busiest week uh of the year. >> Absolutely electric news coming from all angles. Before we get to that, how's Bonosis treating you? How's the food? How's the culture? How's your experience been? >> Amazing. I've been coming here almost every year. uh for the past four years. >> Nice. >> Um and it's um it's every year it's different, but it's I love it here. The best community. People are very friendly and um yeah, I mean uh um you've probably witnessed it as as well that the food is really good.

>> It is favorite type of empanada. >> There's so many. >> Um man, so let's start a app. Okay. You know, we've heard distribution is king uh endlessly throughout uh crypto and other industries. We had regulatory issues with the app stores broadly. We had a lot of constraints. Those have been lifted this year in a big way. Um you guys have brought this a app now to the market effectively a high yield savings application kind of in that neo bank category. Talk to us about kind of the lore there. How did this come about?

What what uh inspired you guys to take this next step? The most amazing thing that we've done in DeFi and particularly with with a is that we're be we're able we've been able to create a very resilient um lending pool. So today u there is roughly like 50 billion worth of u net deposits in a um very stable coin uh centric. So um and it it's been able to operate really well without issues over the period of 5 years. Um um people trust a and as the saying goes just use a right just use a >> defi will win that's a good one too.

>> Defi will win as well and and the way defi will win is is now um trying to make defi accessible to to everyone. So being able to create as simple and as easy as possible way to move uh funds from your bank accounts uh into a uh that's the way we're going to on board u the rest of the world and and um uh to do it uh really well uh we essentially need to have the app and also native ons as well and and that provides the experience where users feel like it's a a more traditional uh uh like a financial application and and and all the abstraction really serves the users.

Abstracting away the um the wallet component, obstructing away u chains, u stable coins and and everything that is really like alien for mainstream users while keeping uh true to the nature of of of DeFi and and uh self-custodial access. I think that's the most important thing. >> Absolutely. The the mobile experience is one that's very familiar with end users. um they're familiar with the online banking experience and now a is firmly within the top 50 banks probably quite higher maybe in the top 30s at this point. Uh Andy and I were at uh Chainlink SmartCon a couple weeks ago.

Fidelity, Black Rockck, these these financial institutions that are sponsoring uh and coming into the space now. Uh so we've we've picked up some institutional guests and connections amongst our network. Uh and so what would your message be to the banks that that could be watching this now that a is uh one of the top banks in in the US in the world? >> Yeah, and the way I see it, A is um even though you know there's a comparison on uh in terms of like the amount of liquidity and and whatnot, A is still a a protocol, a a lending network. And my kind of vision is to see a actually being more uh used by as a infrastructure for a lot of these um institutions and and banks. And then we the way it happens um down the line is that um as more uh traditional

institutions are connecting connecting and also we will see uh also embedded DeFi. So embedded DeFi is the the path I also see how D5 can actually scale uh with these uh integrations and and down the line um as there's more uh nodes in the network it scales the whole liquidity protocol meaning that there is more depth of liquidity boring becomes uh more affordable more business and then uh attracts more uh supply. So it's a flywheel that really benefits everyone who connects into that uh lending network and over time um it really should help also a lot of these financial institutions to lower their operational expenses. So I think the two

ways that um uh let's say banks or fintex can reduce their cost is one using AI and second going onchain and applying these two methods um obviously then allows you to operate with a lower operating u expense meaning there's cost savings uh for the end users and that's the benefit of of defi will win and now embedded defi feels like another term let's coin that right that is another meme that I think >> embedded DeFi and that's the essence that uh people think of a as a bank but it's also a protocol that banks will use within their own systems.

>> Okay. and and so what has been the adoption the institutional adoption of a we've seen a horizon we've seen RWAS um generally how have you seen this progression deeper and deeper into the financial space you you're not seeing competition from banks even though a is rising through the ranks you're seeing uh cooperation and adoption could you talk about how uh how the institutional adoption process has gone >> if I seen more of like um the infrastructure of the future um And it's something that essentially replaces the old rails of of banks um the kind of old paperwork uh processes that existed there and and providing cost savings and more efficiency um and

better access to to capital as well and more transparency which should lead uh to better risk management on our side. Um a horizon obviously has been doing incredible um job here. um we launched the horizon a couple of months ago. It's over half a billion um uh market size at the moment where users can use tokenized assets. So these RWAs as a collateral to borrow stable coins. Why this is interesting is that once you have these traditional assets on chain, you can actually then access liquidity 24/7. And on the l lending side um it provides stable coins stable coin lenders a way to lend against a traditional risk profile that exist in the traditional uh

finance. And um as the tokenizenization continues, we will see ETFs, equities um debt um communities um everything being on chain and then use as a collateral uh in a being able to um have better collateral management, access to liquidity and and just offering uh a better financial uh rails. >> At SmartCon 2 weeks ago, we you know had the opportunity to speak to a lot of th those capital allocators, those who had want to use a horizon. Um, and then obviously here at Dev Connect in Buenosarus, quite the justosition of crowds, right? I mean, Robbie and I, I was wearing like a white long sleeve.

Rob was in like these nice sweaters. I saw you in a suit with Sergey. It was, it was like, okay, Stein's, you know, Stein's in a suit. All right, we're looking good. Um, and so we feel like >> so, so here here's the thing. Like, here's the thing. Like, I like to dress the way I I dress, but the thing is I look really good in suits. Yeah, I can't do it, you know, like if if I if I look good, >> I'll wear a suit. >> You see, I couldn't put the blazer on. I I couldn't do it. >> Look good, you know. That's why they That's why they call a suit, you know. >> All right. I'm not a suit guy. That's what he's saying. Um and so we felt like there's this table that's being set, right? You know, we've been kind of

building for this phase of the market for a while. Um we've seen it, you know, all of the DeFi infrastructure has been laid out for this phase. A is clearly capturing a lot of that market. um and you know chain link and others. How do you see this strategically from a perspective? Right? Like there's this time period right now where horizon has shifted and we'll talk about V4 too. I know that that's been in the works for a long time but you know as far as a broader message to the industry goes this time period is very crucial um for for adoption in that big way. Why have you guys been so successful? What kind of strategically has been your your viewpoint on capturing this uh capital and just generally adoption?

>> Holiday is unified crypto payments. Give your users more wherever they are. Go to holiday.xyz to never write a smart contract again. Looking for yield that stands out? Infinifi gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinify is a battle tested, reliable defy platform that is ready to go. Head to infinifi.xyz. Trade on anything, economics weather sports crypto and more. All on kalchi.com 247 for the world's biggest prediction market.

>> Yeah, I think um DeFi lending is based on trust. Um and trust establishing trust is really important. Um and um that happens with uh good risk management, having resiliency and the resiliency comes by ensuring that there is enough independent stakeholders um in the community that uh review different parameters, choices um and and that creates a a a system where um you establish trust because um you're able to have automated liquidations that work um ensure that the protocol doesn't take more uh risk than than it should be. So I think that is the the the the big aspect of that and uh a has been always a kind of um uh in the forefront of of

innovation. So coming now with a v4 which we launched uh in testn net um yesterday uh was a big success for us and uh something we've been working on couple of years um just showcases that you have to keep innovating and creating new things that apply to these native crypto assets or tokenized assets and um there's a lot to build uh you know we you have to get a whole world of credit on chain uh and there's bunch of problems to solve there and um that's why I'm super excited of uh of the innovation piece as well. And there's tons of innovation happening on Ethereum. Uh we've had lots of projects come in, a lot of rollups that have talked to us about what they're looking for from Ethereum. They're asking for fast finality. They're looking to scale

the L1. Uh and really feels like there the the roll-ups are coming back to Ethereum. The whole community is coming back to Ethereum. Uh, and I'm I'm curious from your perspective because a is not a rollup, doesn't have its own chain, but is such a systemic systemically important piece of Ethereum's DeFi mission. What do you look for in Ethereum? What do you think maybe you would you would prioritize on the Ethereum road map? I definitely think scalability is always important because at some point we will have a moment on Ethereum where you know things get congested and when then congestion happens is you know we that's where all the applications and everything will kind of like slow down and suffer. So that's definitely a priority. Uh roll up

as a scaling strategy is uh is great and the path forward. Um and I think there we have to figure out uh a bit better uh liquidity management between different uh uh networks um and accessing uh the deep uh mainet uh liquidity. But also I would like to see more kind of uh uh more uh innovation on the the mainet as well. The thing about mainet is that it's securing so much value that any innovation has to be considered very uh deeply because it affects a a very secure financial system.

>> Yeah, I feel like um you know the the community of Ethereum has rallied around its censorship resistance, its neutrality of the L1 and I think that we we're actually seeing that the institutional flows, they value that too. >> Yeah. >> Or or did we did we focus too much on that or or do they really truly value that? >> To be honest, they do. um you know there's bunch of institutions that will be in multiple networks as they maybe they do some sort of strategic uh token purchases um of these RWAs um and you'll see them in all networks because it's easy to maintain your C20 but the true really true um kind of like a scaled RWA stuff institutional stuff will happen on

Ethereum um that's where the most of the security is that's where liquidity network effects are um you know I I I used to say and I I still say that you can't get fired from using a you know from integrating a >> um and I think the same applies for Ethereum. So um you have to be like um you know a little bit like a conflicting or or you have to do some sort of uh interesting venture if you are choosing not to use Ethereum and and something else. There might be a reason for do that to do that that might be strategic and and that's fine. you know, we we need to see innovation everywhere, but for the serious stuff and things that has to scale, you know, you have to

choose uh Ethereum and a >> I'd like to get into V4 a bit more, but I just got to ask is things a bit more boring now, you know, compared to to 2020. I know it's exciting, but like RWA, institutions, stable coins, like you ever just miss the old days? >> Ah, yeah. I mean, I do and I don't because uh it was a lot of adrenaline. >> Oh, we know. Yeah. sleepless nights. Um, yeah. And, uh, back in D5, fight summer. Um, but also I I think, uh, boring is good. Um, boring, um, >> sustainable, right, >> maybe another way to put it is peaceful.

Peace feel a bit more peaceful. You know, these things are doing well. They're in these things are really, you know, important to to the global financial system. >> Uh, so boring, peaceful, like things are a little little bit more a little bit more steady these days, it feels. >> Yeah. And I think um why this is important is because uh we need to show that DeFi is resilient. It works and you know it can be integrated to the traditional financial um applications and and and and down the line you still have this open ecosystem to explore and experiment. Um but last thing we need is is some sort of a a vault to explode and and uh or a curator to explode. like we we need to be in a place where really um you know DeFi feels trusted. If you lose the trust, we

push back the whole space uh down the line and that's that's what happened uh for crypto so many times. You know, we get into a really good place and and then there is some sort of an issue. Um uh and and uh and I think now the the best thing to do is is to to build that boring uh DeFi um and and ensure that this can be kind of like the baseline financial infrastructure for for everyone. You you talk about resiliency a lot before we get into V4. Um you you've said resiliency is the key reason why many users and integrators trust a uh and why a has become one of the most trusted D5 protocols. The DAO has a prevetted multistakeholder process uh that ensures no junk assets are listed and the protocol doesn't take on any

more risk than it should. Talk talk to us about that prevetting process when when a curator or a risk manager is looking to come into the a DAO. Um how are you vetting them and and generally what are you looking for in some of the participants in the DAO? Uh for for anyone who may be looking at getting involved. The main important piece about this obviously there's multiple stakeholders they have different kind of roles um from being risk managers um to being let's say uh governance delegates um to um to let's say um someone who are doing like the growth work as well and technical contributors like overlaps um and one important thing of of all this equation is incentives.

So what is the incentive for every single stakeholder to keep the system safe? And when we think about um a uh risk managers are typically paid uh at a fixed fee uh to ensure that the protocol is is safe and secure um and they have reputation at their stake. So when you think about more of like these um uh creator models um they're more like a hedge funds where uh their incentives is to actually uh take more uh risk. And the reason is that a lot of these strategies are commoditized uh on chain meaning you have two choices. You lower your fees which are already rock bottom or you take additional uh risk and try to find capital and this is why we've seen few weeks ago uh some of these

issues with the vaults because you see um kind of like a curators taking more risk because they get pressure of acquiring new new capital uh down the line. So this is important to kind of acknowledge and the resiliency comes from the fact that everyone is incentivized to to protect the system and it's not a really of a centric thing because it works the same way on Ethereum. So obviously you have Ethereum stakers and uh nodes that basically uh protect the system by accepting um uh uh right form of uh blocks for example and not upgrading the code base for if you know if someone writes some sort of a bad implementation. So there's that kind

of like a guardianship that exists on on different levels in our uh stack. >> Yeah. And just kind of last thing on on this, is is there any really important takeaways or lessons that the DeFi community should have, you know, kind of hardcoded in our minds post this 1010 incident with regards to rehypothecation, recursive lending, just generally like the like the opaque off-chain kind of uh lack of transparency when it comes to this, you know, DeFi world. What are some of the key uh takeaways and and thoughts that we need to have going forward? the aspect of like um high yields is always um um there's something always might be behind that doesn't really necessarily um um might be above um the the risk

expectations of of of a lot of the uh users. Um I think that's that that's one of the aspect but also um kind of like um understanding you know where and how these systems work and and where the uh yield is coming from that is really important and luckily in DeFi it's really easy to understand uh when it's on chain when it's offchain then you need additional tools like proof of reserves uh and and so so forth so I think we're still in a in a world where if everyone is excited about um um some sort of financial opportunity that doesn't necessarily mean it's it's fully kind of uh safe for everyone in my role as a kind of a advocate in the DeFi

ecosystem seeing the space evolve uh almost a decade I actually want to rather like protect the safe DeFi and and somehow ensure that there is enough uh tooling and information available um for everyone to understand like the the differences >> uh while still uh ensuring that the space is open and innovative. And that's my kind of like a biggest uh concern is the offchain stuff. >> How to verify it, how to understand like what's happening, who to trust, um, and what are the trust assumptions. Go anywhere onchain instantly with relay.link. Relay is closing in on 10 billion transferred. Go to relay.link to bridge your assets now. Not your keys, not your coins. From the team that

pioneered cold storage, Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. Get a treasure at treasure.io. This offchain component is aggressively growing because we're bringing these RWAs onchain. >> Um, and so doing that requires the Yeah. proof of reserves, better oracle systems etc. >> Um, so you guys spent the last couple years building V4. >> Um, apparently V3 wasn't good enough. I don't know. I mean, V3 is great. We've been using a for 5 years. Uh but V4 is the next uh you know interpretation of what D5 needs next.

>> Talk to us about kind of what the improvements from V3 are, why V4 is uh so important and just kind of what you're looking to get out of that uh this next phase. >> Yeah, one of the interesting things is that we want to double down on this idea of uh concentrating uh capital. Um and now for example in a V3 there is multiple markets. So you might have uh the prime and the core market on Ethereum. Um and um you don't have uh a way of actually uh to share the liquidity. So uh whenever you create a new market on a uh you have to find a way of of seeding the liquidity and typically um how to do that is to create incentives or rent the liquidity um the

LPS from somewhere. So that's not really sustainable way. So the liquidity hub and spoke model allows to create markets on the spoke level and and create give credit lines from the liquidity hub to each spoke based on the um kind of like a scale and risk that uh the liquidity hub wants to subscribes to. And I think that model is very unique because you can uh segregate risk uh while at the same time you are not segregating uh liquidity and there can be multiple liquidity hubs based on the risk profiles uh let's say the lower risk hub uh risk adjusted and and some sort of a um emerging uh uh u uh hub as well.

>> Well, that was always the push back to V2, right? because we saw like Cream Finance come out in 2020 and and and they were like, "All right, we're going to have isolated pools for each asset." >> Obviously, that didn't work. Um, but that was like the push back. It was like a has all these poolled assets. Uh, one bad collateral asset nukes the entire kind of design and obviously because of of the DAO and the way that you guys have curated your risk management, that has not happened, but V4 really takes that to the next level and almost like trenches out risk as if it was like a junior, a senior trench kind of. And typically even V3 like all the asset has uh supply and borrow caps and and limitations. So so so so there is a really good granular risk management there. Uh V4 just provides a lot of new

tooling that makes um the jobs of risk managers uh a bit more advanced and and uh easier to to uh to do and additional um uh measures as well. But overall, I think it's um really interesting uh uh overall foundation because uh spokes can be custom. Um and I think uh we'll see different kinds of custom implementations where V3 is more like a monolithic uh codebase. We've had uh Chaos Labs, we've had Sergey from Chainlink, we've had these guys on the show. Uh these guys are partners of a when you're thinking and designing and scoping out a major upgrade like V4. Um, how much are you looking at your partners and you're talking with them

and working with them? Uh, is it mostly internal or you bringing this to the external partners and you're all collectively thinking about what the upgrade looks like? >> Very collective. There's a lot of uh people involved. So I I think overlaps while uh running a lot of the codebase there is contributors uh from different security teams uh contributions from other uh DA members uh and and also uh from the larger a ecosystem. It's it's a very uh collab collaborative uh process and it's also important because there's different stakeholders and also dependencies. So I think um it's really interesting to build in public. It's it's such a different world. uh it requires a lot of coordination um but

also you get a really uh good results as well for the code quality. >> We're coming up on time. We do have a gift for you. Um this has been part of our our theme of the of the week and just generally in in in the space now. Um return to fundamentals is our current slogan. It is our big it is our message to the masses. Um so from your perspective from obvious perspective what does this mean for the entire Ethereum community for for the industry? What does return to fundamentals mean to you Stani? >> Yeah, I think fundamentals uh it means that you have to build something that is uh resilient but also creates upside for the older stakeholders. So a protocol earns um we're going to earn 150 million this year as an example. It's a really

good showcase of like how you build fundamentals um on chain. And I think I deserve that uh we deserve this t-shirt because uh of of what we're achieving with with the a fundamentals, but also it means that uh having good foundations and and and building something that is uh sticky and resilient. >> All right. The other little game that we're doing here is we're building a Dev Connect playlist for on Spotify with all of our speakers. Um I'm going to put you on the spot here and ask you for a song. Uh what song would you like to add to the Dev Connect playlist? can be something that you like recently. It can be a favorite.

>> Yeah. >> What what artist do you like? What's your kind of music taste? >> I think one uh good artist you should think about is uh Zenobi. So it's a X I um N O BI. >> Zenobi. Okay. Very cool. >> And his tracks are really good. And he's going to uh going to be doing a backtoback session uh today with another Rava DJ uh Givant. >> Okay. Uh, so it's going to be really uh >> far away place. >> That's one of his bangers. >> Yeah, that's a good one though. >> There it is.

>> I'd add to the list and um hope to see you you all in ra. >> Yes, sir. >> Last thing for you, Stony, we've got a lightning round. You've got yes or no questions. You can skip if you don't want to answer it. Lightning round Stonny live rollup TV. Just use blank. >> A. >> That one was easy. Uh >> just use a >> just use a Yeah. Uh uh what is the biggest challenge you've overcome in the past year? >> Simplicity. >> In one to two sentences, describe where a will be in 2030. >> The biggest best RA up until this point. >> Boga.

>> Who are the people outside of a that you call to chat through ideas? >> Uh guy from Metina. >> Uh fill in the blank. A V4 will be >> the backbone of all finance. >> Best place on earth and worst place on earth to live for crypto natives. Worst place to live uh will probably be um France. >> Shout out to Mark. RIP Mark. I know you've gotten out of there. And best place, >> best place to I won't say something exotic. So I'm pretty comfortable in London so far. Let's see how the government will progress from here. But uh so far so good.

>> A TVL has exceeded 50 billion. Where will A TVL be in 2030? I think uh we'll be way beyond beyond trillions at that point. >> Yeah, way beyond trillions. Stani Kulachov live from Rollup TV in Buenosares. Guys, thank you so much for tuning in. Stan, thank you so much, man. >> Thank you so much. It's fun to have you. >> Thank you. Thank you.