Aave, a prominent decentralized finance (DeFi) protocol, has launched a new savings application designed to provide retail users with higher-yield deposit options and real-time interest tracking.
The Aave App will feature Annual Percentage Yields (APYs) ranging from 5% to 9% and will display interest accrual in real time, as detailed in a blog post on Monday. The application also offers balance protection of up to $1 million, tools for users to model potential earnings, and support for recurring deposits.
Users can fund their accounts using deposits from thousands of banks, debit cards, and supported stablecoins. The app facilitates instant withdrawals without any waiting period. An early access waitlist is currently open.
Aave states that the new app is positioned to challenge traditional banks and mobile savings tools, which it contends typically offer rates between 0.4% and 4% APY on high-yield accounts, rates that "barely keep up with inflation."
Aave operates as a decentralized finance protocol that enables the lending and borrowing of crypto assets through smart contracts on the Ethereum network. Initially launched as ETHLend in November 2017, it was rebranded to Aave in September 2018.
Crypto's Challenge to Traditional Banking
Onchain researcher Willy Woo recently shared an analysis on X, suggesting that the traditional fiat system functions similarly to an annual "wealth tax." He estimated long-term dollar debasement at approximately 6.9% per year and highlighted a 40% increase in the money supply between 2020 and 2022 during the COVID-19 pandemic.
One significant way the crypto space is competing with traditional banks and assisting individuals in combating inflation is by offering users high yields on stablecoins. While the U.S. GENIUS Act has banned yield-bearing stablecoins, it does not prohibit third-party platforms from developing and offering yield products built upon them.
In September, Coinbase announced a partnership with the Morpho DeFi lending protocol, enabling users to earn up to 10.8% on their USDC stablecoin holdings. Previously, the exchange was already providing users with 4.5% APY in rewards for holding USDC on its platform.
Later that same month, Coinbase CEO Brian Armstrong indicated the company's intention to develop a comprehensive crypto "super app." This app is envisioned to eventually encompass and replace many functions currently offered by traditional banking institutions.
In October, Crypto.com also entered into a partnership with Morpho. This collaboration allows users to access stablecoin-lending vaults on the Cronos chain, enabling deposits of wrapped Ether (ETH) or Bitcoin (BTC) to earn yield through Morpho's decentralized finance markets.
Traditional banks are actively responding to these developments. On November 5, several banking groups submitted recommendations to the Treasury Department, urging them to extend the stablecoin interest ban to encompass digital asset platforms, including exchanges and associated service providers.