A quick overview of the latest progress of the three major DeFi blue-chip projects Aave, Sky, and Compound

Author: Jun, Bankless; Translator: Deng Tong, Golden Finance

The story of DeFi is extraordinary.

From its early days as an experiment and speculative frenzy, DeFi has now grown into a cornerstone of the crypto ecosystem.

At the heart of this revolution are blue-chip lending protocols - the pioneers that kicked off the DeFi summer. They have faced black swans, proven product-market fit, and a solid position in the ecosystem.

Now, they are ready for the next phase of growth. We have witnessed these blue-chip companies expand their product range, diversify their revenue streams, and build for the future, while remaining committed to the DAO spirit and the security of Ethereum.

In this article, we will take a deep dive into the latest developments in the world of DeFi blue-chip companies. We will examine their strategies, innovations, and future ambitions. By understanding their vision, we can get a glimpse into the next wave of growth that will shape our industry.

Aave

Aave is not an ordinary lending market, but a DeFi lending market for cryptocurrencies, with a massive TVL of over $11 billion. Everyone in the space has probably used it at one time or another. How did they do that? By relentlessly solving problems.

People need to borrow and lend crypto, and Aave built a brilliant system to do just that.

But Aave isn’t stopping there. Their DAO, one of the most active in DeFi, just released their vision for Aave 2030. It’s basically a roadmap for how to take their already dominant technology (Aave V3 and the GHO stablecoin) and push it into dominance in the multi-chain space, potentially even launching their own chain at some point.

At the heart of Aave’s ambitious plans is Aave V4. Aave V4 proposes a whole new architecture for the protocol. Think of it as a unified liquidity layer that aims to make the system more efficient with capital. Easier for users, less governance hassles, more capital in motion — that’s the goal. Aave Labs also plans to introduce a range of automation and risk parameter improvements to ensure the system runs smoothly in both bear and bull markets.

In addition, Aave plans to become chain-neutral through its Cross-Chain Liquidity Layer (CCLL). It will let users tap into liquidity pools on all supported chains on Aave — instantly accessible wherever you go.

Another big bet? Their stablecoin, GHO. They plan to integrate it more deeply into V4 and use it as a springboard to bring real-world assets (RWA) to crypto. They are working with Chainlink to make this happen.

That’s not all. They are even considering building their own chain, the Aave Network. This would be the ultimate Aave hub, allowing them to unlock even crazier network effects. Think GHO fees, a seamless V4-centric user experience, and widely used account abstractions — all powered by the security of Ethereum.

In addition, Aave Labs also wants to go beyond Ethereum-based chains (EVM). They plan to explore non-EVM chains in the coming years.

Given its track record and current development trajectory, Aave could very well dominate the DeFi lending market over the next decade if all proposed features are executed.

Sky (formerly MakerDAO)

Sky is in the midst of a transformation driven by its ambitious vision for the future, Endgame. Essentially, the multi-year initiative aims to transform The DAO into a self-sustaining network of DAOs, with each DAO working together to drive the ecosystem forward and establish its stablecoin as a dominant force — while maintaining a healthy balance of governance.

MakerDAO is going through a massive period of transformation, all in line with its future vision, Endgame, a comprehensive 5-phase, multi-year plan to build its ecosystem into a self-sustaining DAO network, drive the ecosystem forward, and grow its stablecoin into one of the most widely used stablecoins in the ecosystem, without sacrificing governance balance.

The first phase of Endgame has just launched with the Sky Protocol. Sky lets users generate USDS, a stablecoin pegged to the US dollar, to save or earn yield. It’s a strategic move to unify the brand, simplify governance, and attract new users. Think of it as Maker 2.0 — the core mission is the same, but with a new look and some exciting new features.

A key part of Sky’s rebrand is a complete overhaul of the tokens. The governance token MKR becomes SKY, and the stablecoin DAI becomes USDS. This isn’t just a name change; it’s about enhancing decentralization, scalability, and user experience.

It also introduced Stars — specialized child DAOs tasked with building new features on top of the base protocol. Imagine a team of independent contractors working to expand the Sky ecosystem — that’s the concept behind Stars. The first Star to launch was Spark Protocol, a DeFi lending platform with over $2 billion in TVL.

The endgame doesn’t stop with Sky Protocol and Stars. Phases 3, 4, and 5 are filled with initiatives designed to streamline growth, increase DAO participation, and usher in a new era of DeFi innovation:

• Phase 3 brings AI into the mix, introducing AI-driven governance tools to streamline decision-making.

• Phase 4 focuses on incentivizing active participation in governance. Think of a rewards program for participating users — that’s the basic idea.

• Phase V introduces NewChain, a brand new blockchain designed to enhance Sky’s governance processes – paving the way for the full implementation of Endgame’s advanced features and token economics.

Additionally, Endgame plans also include the inclusion of RWAs in the protocol. MakerDAO’s $1 billion investment in tokenized US Treasury issuance through initiatives such as the Spark Tokenization Grand Prix suggests that RWAs will continue to be a major revenue source for Sky.

With all of these efforts in the Endgame vision now in motion with the launch of Sky, it will be interesting to see if USDS adoption can increase as expected in the coming years and compete with the top stablecoins in the ecosystem.

Compound

Compound is a bit like DeFi’s reliable old friend. It’s been around since the early days, quietly doing its thing — letting people lend, borrow crypto, and earn interest. It’s not too noticeable, and not always eye-catching, but it’s always stable.

Their latest major update, Compound III, is coming in 2023. It’s not a complete overhaul; it’s more like a slimmed-down version of their existing product. They’re focused on simplifying things, removing complexity without sacrificing functionality, and providing borrowers with simple, effective tools.

That’s the Compound philosophy: keep it simple, focus on security and efficiency, and prioritize user experience. They don’t mess with what works. In a world full of over-engineered protocols, this is a refreshing approach.

Over the years, they’ve added support for L2 and other popular chains, but they’ve done it in a measured, thoughtful way. They focus on major markets like ETH, USDC, and USDT, and only expand to new chains when it makes sense. It’s a slow and steady approach, but a reliable one.

It’s working well for them. Compound remains one of the go-to platforms for investors looking to earn a return on their idle crypto. With a total value locked of around $2 billion, Compound may not be the biggest player in the DeFi space, but it’s definitely one of the most respected.

Summary

It’s refreshing to see DeFi’s blue chip lending protocols competing so fiercely. This constant drive to innovate is exactly the kind of energy that drives DeFi forward.

As these established protocols compete for dominance, they will experiment, iterate, and ultimately build better, more user-friendly, and more robust financial rails. This innovation will not only benefit these protocols; it will benefit the entire crypto ecosystem by attracting new users and enabling broader adoption!