Aave, MakerDAO Propose DeFi Alliance to Bridge TradFi Gap

Executives from Aave and MakerDAO, now known as Sky, have proposed forming an alliance aimed at improving the sustainability of decentralized finance (DeFi).

This proposal comes as the sustainability of DeFi has recently become a topic of concern, with key industry leaders addressing potential challenges to the sector’s long-term viability.

Aave to Collaborate with MakerDAO

Aave network founder Stani Kulechov and MakerDAO co-founder Rune Christensen have proposed a DeFi alliance to promote broader adoption and bridge the gap between decentralized and traditional finance. According to Aave Labs, the collaboration will “turbocharge DeFi“.

“An initiative by Christensen and Kulechov, Sky Aave Force has an ambitious goal: to drive mass adoption and close the gap between DeFi and TradFi. Now is the time to work together,” read the announcement.

According to Kulechov, DeFi protocols have matured, demonstrating resilience and market readiness. This realization led to the proposal, as he believes that collaborating would position DeFi as the backbone of all finance. Kulechov expects the Sky Aave Force to provide unparalleled access and foster new use cases.

Read more: Top 11 DeFi Protocols To Keep an Eye on in 2024

The latest development is noteworthy as MakerDAO, which manages the largest decentralized stablecoin DAI, has rebranded to Sky. The rebranding also introduced a new governance token, with an exchange rate of 1 MKR equivalent to 24,000 SKY tokens.

This rebranding aims to drive the “next evolution of DeFi” and increase accessibility. However, the changes have sparked concerns due to the introduction of restrictions like VPN blocks and freeze functions.

“Maker has pivoted from decentralized stablecoin to VPN detector API,” one X user wrote.

Nevertheless, DAI remains the largest decentralized stablecoin, distinguishing itself by allowing users to trade anonymously without intermediary censorship.

Read more: A Guide to the Best Stablecoins in 2024

Despite DAI’s decentralized reputation, it hasn’t been immune to exploitation, as seen in the Wintermute hack, where $160 million worth of assets, including DAI, were moved to Curve to avoid freezing. Christensen explained that the freeze function in USDS is an optional upgrade. It’s not applicable from the start, and would require governance votes to activate.

However, the mere mention of this feature concerned some users, who feared DAI might lose its decentralized edge and become similar to other stablecoins.