Hyperliquid, Ethena, Aave Trio Panel: Where is the Future of DeFi?

Editor's Note:

DeFi, as one of the most transformative areas in the cryptocurrency industry, is evolving from early experimental protocols into a key part of the global financial infrastructure.

This article is compiled from a roundtable discussion during Token2049 in 2025. The forum was hosted by Dragonfly partner Haseeb Qureshi and featured three representatives from core DeFi protocols: JEFF (Hyperliquid), GUY (Ethena), and STANI (Aave).

The three guests delved into discussions around the generalization trend of stablecoins, the future of perpetual contracts, the mainstreaming path of on-chain yield products, the integration of DeFi and CeFi, systemic risk management, and the "corporatization" evolution of DeFi protocols, sharing their insights and perspectives on industry hot topics.

Below is the translated content by DappBird:

The Explosion of "Stablecoinization"

Host: Hello, everyone, and welcome to this groundbreaking DeFi roundtable discussion. Today, we have three of the most important representatives in the DeFi space: Hyperliquid, Ethena, and Aave. Let's dive right in.

One significant trend this year is the explosion of "Stablecoinization." For example, Hyperliquid recently launched USGH, Athena collaborated with MegaETH to launch MUSD, and Aave introduced the native stablecoin GHO.

Will this trend accelerate? Will every DeFi protocol in the future have its own stablecoin? If not, what kind of ecosystem is large and cohesive enough to warrant its stablecoin? Will we see consolidation or a full-scale expansion of stablecoins? Jeff, what's your take?

JEFF (Hyperliquid): Our view is somewhat neutral. Hyperliquid is not a single application but a network, a system collectively built by the community.

Our model is a platform that hosts all financial activities. From a financial perspective, stablecoins are the bridge connecting traditional finance and DeFi. Therefore, we place great importance on building the infrastructure for stablecoins. We believe the boundary between infrastructure and applications is blurry, and our core contributors have their own views on this. We aim for Hyperliquid to be a natural platform for building these stablecoins, ultimately achieving liquidity integration.

Host: Guy, what's your take?

GUY (Ethena): I believe the week of the USGH proposal and MegaETH announcement marked a "before and after" moment for stablecoin generalization. We have recently engaged with almost all mainstream chains, applications, and wallets, and everyone is now thinking more seriously about this issue than ever before.

I think the question is: Do we really need every application, wallet, and chain to have its own savings account? The answer may be no. However, the incentive mechanism may drive us toward this outcome. If you control the user distribution channel, why not issue your own stablecoin and earn revenue? This could pose a challenge to companies like Circle, as the distribution platform may choose to internalize these earnings. I believe this trend will rapidly accelerate in the coming weeks.

Host: So you think we are currently in an expansion phase, where everyone is issuing their own stablecoins, and then we'll see who can survive?

GUY (Ethena): Exactly. Regarding what kind of platform is suitable for issuing a stablecoin, I think chains and applications are different. An application like Hyperliquid can enforce the use of its stablecoin through stablecoin-priced trading pairs, compelling users to use its stablecoin. On the other hand, a chain cannot force an application or user to use a particular stablecoin because the ultimate decision-making power lies with the application. This difference may create some tension between chains, applications, and wallets.

Host: Apps are easier to push, while chains are more challenging.

GUY (Ethena): Yes, the proximity to users is a key variable.

Host: Understood. Stani, what are your thoughts?

STANI (Aave): From our perspective, the launch of the GHO stablecoin was based on user demand. Interest rates in other markets are usually variable, whereas GHO provides a predictable borrowing cost, which is a core user demand.
After GHO was widely used by Aave users, we found that DeFi lending is actually a low-margin business. Currently, we have $700 billion in net deposits, $300 billion in borrowing volume, and GHO's circulating supply is only $100 million, yet it can generate the same revenue as a $1 billion external stablecoin. This allows the Aave protocol to transition to higher-margin business, increasing profits by about 10 times.

STANI (Aave):
We also see stablecoins as a way to capture revenue outside of the core application and integrate them into various financial applications and infrastructures. We focus on Esco (savings products), where a portion of the revenue from GHO lending is distributed to Esco users. These products can be further integrated into fintech and the broader ecosystem. This not only increases Aave's profit margin but also allows the earnings to be shared with holders of Esco without the need for locking or cooling-off periods. This is a strategic business decision for us and a way to extend the protocol's economic model beyond Aave.

Host: So the attractiveness of the stablecoin economic model is largely due to interest rates. For example, Tether is said to be valued at $500 billion because they earn the Fed interest rate by holding assets, which is the appeal of stablecoins.

Of course, when DeFi initially emerged, interest rates were almost at zero. Now interest rates are soaring, we have gone through low rates, high rates, and back to low rates. But your protocols have basically only experienced a high-rate environment. Now, rates are falling, the Fed's dot plot shows continued rate cuts over the next few years. What does this mean for your protocol? If we enter a lower interest rate environment (although not necessarily zero), how will DeFi change?

GUY (Ethena):

For us, this is actually one of the biggest differences between us and traditional stablecoin issuers. Interest rates in crypto DeFi are often inversely correlated with real-world rates. We saw a similar situation in the last cycle: when the Fed rate was zero, crypto borrowing rates were as high as 30%-40%, lasting for 6 to 9 months (2021). The key is the spread between DeFi rates and the Fed rate.

For us, this is actually a macro positive. When our competitors see a rate drop, their interest income quickly decreases. But we believe that Athena's product rates either remain stable or increase with market heat. This means we can retain users without raising costs, expand market share, while competitors relying on interest income struggle to maintain. This is one of our biggest advantages, and I believe Ethena is one of the most responsive assets in the crypto market to rate declines.

Host: In other words, it's a good thing if your source of income is not the Fed rate.

GUY (Ethena): Exactly, this also applies to Stani's business.

Host: Stani, what's your take?

STANI (Aave): When we look at the data, we find that Aave's average yield has always been higher than the U.S. Treasury bond rate. To achieve this in a high-rate environment is interesting, even more so in a low-rate environment. Every central bank rate cut (whether by the Fed, ECB, BoE, etc.) creates arbitrage opportunities for DeFi rates.

So I think with rates falling, we are heading towards a bull market for DeFi yields. This means that users worldwide — whether in the West, Asia, Latin America, or Africa — can access equally attractive financial opportunities. This is a major change. The last time we had a low-rate environment was just before DeFi Summer, when early DeFi users flocked in because real rates were almost zero, and DeFi offered higher returns. It coincided with the pandemic, giving people time to explore these tech opportunities.

Today, we have built a very mature DeFi infrastructure. Aave has gone through years of battle testing, and projects like Athena and Hyperliquid are also developing. We are entering a phase where DeFi can integrate into a broader financial and technological system, distributing yields.

Especially for traditional finance and fintech, when they see real interest rates decreasing, they will start looking for alternative sources of yield to retain users; otherwise, users will move to other platforms. This will be the foundation of the next major cycle in DeFi.

Host: Rising yields, falling rates, increased risk appetite, all favorable for Aave.

STANI (Aave): Yes. But I also want to add that the Federal Reserve rate and DeFi rate are not entirely unrelated; macro factors do influence these rates. All financial systems are interconnected.

GUY (Ethena): I would like to add to Stani's point. In the previous cycle, we did not have mechanisms to connect DeFi with traditional finance. Everyone was working hard to establish credit facilities, hoping to find channels for the inflow of US dollars into the system.

But now the situation is different. Whether it's DATs debt financing entering DeFi, ETF or ETP products, or Stani's product integrating into Web2 fintech applications as backend infrastructure, these channels now exist. Last cycle, we couldn't bridge these credit spreads, but now we can achieve it on a much larger scale. This is the biggest macro bullish signal for DeFi.

Host: Well said. Jeff, how do you see the impact of rate changes on Hyperliquid?

JEFF (Hyperliquid): This is not directly relevant to Hyperliquid because we are a protocol aggregator. I think the point you raised is excellent. I recall that in 2020, the reason for the existence of spreads was actually the lack of free capital movement. The market itself is efficient, so I'm curious about what will happen this time. I predict that rates will eventually converge, but as you said, there is now a connected "organizational structure."

The development of Athena actually began from this "accessibility challenge" — capital chasing yield but not knowing how to enter the crypto track to capture these obvious arbitrage opportunities. So, I believe there will be scalable growth this time, but rates may eventually converge.

However, I also believe that there isn't a strong correlation between broad market activity and rates (please correct me if I'm wrong). Rates more so affect businesses highly correlated with rate fluctuations, such as lending. My guess is that trading volume will increase because trading volume and asset prices are long-term correlated.

Overall, I believe financial activities are here to stay, and there is a genuine need for capital allocation. Hyperliquid's stance is neutral; we simply aim to build infrastructure that can upgrade the financial system.

Host: Stani's point of view is that the demand for "speculative returns" will rise, and I guess this is bullish for all trading-related businesses. Do you agree?

The New Trends and Risks of DeFi

Host: Alright, let's discuss the potential new trends in DeFi.

Currently, the three of you represent the three major directions of DeFi: trading, stablecoins, and lending. I remember in 2017, uidx's whitepaper first introduced the concept of Perpetual Futures. At that time, I finished reading it and thought this would definitely be a big thing, but it wasn't until a year ago that Hyperliquid truly operationalized it at scale. So, it was "obvious" early on, but it took a long time to materialize.

What do you think the next similar trend will be? Something that is "obviously going to happen but hasn't arrived yet."

GUY (Ethena): For me, it might be perpetual swaps on equities in the stock market. You know, Robinhood's core business is actually stock options trading volume. And I believe that many retail traders' real need is: they want to leverage long a stock rather than price volatility or option Greeks.

We can look at the experience in the crypto market: in the crypto space, perpetual futures trading volume may account for 95% or even more of options trading. In other words, when users have a choice, they are more inclined to use perpetual futures to express their leverage views on the underlying asset.

So I think this is a very correct product form, and the market has a clear demand for it. You can see this demand in the crypto market, and the asset size of the US stock market is 30 times that of the crypto market. Therefore, I believe that the "stock market version of Hyperliquid" will be the next huge opportunity.

Host: Why has this trend been delayed for so long?

GUY (Ethena): Mainly because in the US, the legality of such operations has always been unclear. But I think within the next 12 months, the US may allow the launch of stock perpetual futures. For example, Coinbase recently launched futures products similar to "perpetual style," which can be seen as an indication of regulatory stance. So, we are just waiting for regulatory clarity, and then this product can take off.

Host: Jeff, what are your thoughts?

JEFF (Hyperliquid): I believe perpetual contracts are one of the greatest innovations in the crypto space. Although the concept may have been proposed earlier, it was truly driven by BitMEX and its successors, who continuously optimized the technology, turning it into a superior derivative instrument.

I think regulation, although lagging behind, will eventually be propelled by 'good products.' The majority of the market's trading volume is now in data-driven futures, but that doesn't mean it has become the norm. Perpetual contracts may be one of the unexpected paths for traditional finance to move on-chain.

For example, Real-World Asset (RWA) tokenization has not yet become widespread, mainly due to the complexity of offline processes. Perpetual contracts can bypass many of these obstacles, reducing friction between on-chain and off-chain.

Host: So now we have two perspectives supporting 'perpetual contracts.'

GUY (Ethena): Yes, and there's an interesting point Jeff mentioned: what changes in user behavior will occur when the market shifts from 'Monday to Friday' to '24/7' all year round?

For instance, if you're a stock analyst and on a Sunday night, you see Jeff Bezos at a nightclub (of course, this is a fictional example), you might consider shorting Amazon the following week. You almost have a 'fiduciary duty' to trade on weekends, but traditional markets are not open.

If perpetual contracts can make the market run 24/7, it will 'force' users to express opinions even on non-trading days. This mechanism will attract traditional finance to actively participate in this product rather than passively opt-out.

JEFF (Hyperliquid): I think this applies not only to a specific asset class. Perpetual contracts are actually one of the most effective ways to express a 'Delta One' view (i.e., directly reflect the underlying asset's price movements). It is a core financial primitive, almost a mathematical structure. The market should be efficient, enabling efficient price discovery.

Host: So Jeff's point is: this is a 'mathematical elegance.'

JEFF (Hyperliquid): Exactly, but we also need to take a more holistic view of this issue. Finance is not just about a hot asset or a particular identity; it is about human collaboration, price discovery, and liquidity allocation system. We need to ensure that liquidity effectively serves those who truly need it. That is the beauty of finance.

Host: Stani, what's your take?

STANI (Aave): I agree that the concept of "Everything as a Sustainable Smart Contract" is a very interesting direction. It will continue to grow much like derivatives in traditional finance.

I believe that tokenized assets will also have their own space to develop as long as some restrictions can be eased. Both of these product forms will coexist, but the share of derivatives will be larger, just as it has happened in traditional finance.

These products are particularly suitable for "advanced users." However, I believe the real opportunity is to bring this technology to mainstream users. For example, providing on-chain yield strategies in a simple form to the average person so they can also participate.

Athena's approach is a great example: bundling on-chain native strategies or cryptographic primitives into an "economic opportunity" and offering it to a wider range of users. The conversion of "on-chain yield → mainstream users" will be a very important trend.

In the lending space, we are also exploring how to enhance "predictability." Fixed-rate loans are an important direction we are researching.

We are also contemplating how to break the "over-collateralization" model—where users must provide cryptocurrency as collateral. We hope to expand the credit model beyond pure crypto collateral. Tokenized assets are one direction, but we aim to go further.

The benefit of fixed-rate loans is that they can bring predictability to both the lender and borrower. For the lender, this is an opportunity in the fixed-income market; for the borrower, it can better hedge against interest rate risk.

The slow development of fixed-rate loans in DeFi in the past was due to the high efficiency of the floating-rate pools. For instance, Aave's lending pool efficiency ranges from 88% to 92%, with little optimization space.

However, once fixed income and fixed lending are introduced, more complex credit and investment products can be built on existing infrastructure. I believe this is a very worthy area to watch, and there will be significant growth in the future.

DeFi "Aggregation": Is it against the original idea of decentralization

Host: Let's switch topics. You three respectively represent the trading, stablecoin, and lending fields, but you are also involved in each other's areas.

For example, Aave has launched its own stablecoin; you support the Athena-driven exchange (Texas); and Hyperliquid also has USDH and lending protocols. Are you becoming a new DeFi conglomerate? I remember there were discussions about Sushi and Yearn Finance being a "DeFi conglomerate," but in the end, it didn't truly succeed.

But now it seems like you are really driving this model forward. How do you see this trend? What is the ultimate goal?

JEFF (Hyperliquid): Personally, I think the term "DeFi Group" is a bit self-contradictory. The original intention of DeFi is like LEGO blocks—each team focuses on a specific module, takes it to the extreme, and then allows others to access and combine it through APIs.

This idea may have seemed more like a "meme" in the previous cycle, but now it is gradually becoming a reality.

People may have different views on the vision, but for Hyperliquid, we place great importance on building core financial primitives on a "trust-neutral" platform.

For example, spot trading, tokenization of assets—these are core businesses in the eyes of traditional groups (such as centralized exchanges) that they must do themselves. But at Hyperliquid, we hope these functionalities can be built by the community and remain open.

Initially, many people doubted whether this model was feasible, but I believe we have already demonstrated that it is achievable. We will continue to iterate on this process.

I firmly believe that the original idea of DeFi is the right way to build a financial system—more resilient, with less systemic risk. Because when risks are isolated in various modules, the overall system is more secure. This concept resonates in both traditional finance and DeFi.

GUY (Ethena): I think part of the issue is that there are actually not many business models in the crypto space that can truly support multi-billion-dollar scales. The three directions you just mentioned (trading, stablecoins, lending) are basically all there is.

So when you try to expand your business, seek new revenue streams, you naturally step into other teams' territories, leading to "toe-stepping."

Our own strategy is: first focus on doing one thing extremely well, then consider other directions. Sometimes there is indeed the temptation to "do a little bit of everything," but there have been many failures of "DeFi super apps" in history—they did not excel in each function, and ultimately, no one really cared about them.

Our philosophy is: focus on taking one product to the extreme. We even believe that we have far from realized the full potential of this product.

We are not a platform like Hyperliquid, but there are indeed some applications building on top of our core product. We do not intend to run our own exchange but rather open up our product for other teams to build their businesses on.

For example, USGH runs on Hyperliquid, but it is not a native product of Hyperliquid; it was built by another team. This relationship is mutual, as we also have teams building products on Hyperliquid.

So, back to your question, the issue is: there are not many truly lucrative opportunities in the crypto space. Therefore, the largest participants naturally tend to "do a bit of everything," such as centralized exchanges also creating stablecoins or their own chains, and so on. This pattern is repeated throughout the industry.

Host: Yes, Jeff's point is: Traditional financial groups' approach is to "serve themselves"; they are not open, connected, or compositional. In DeFi, we have this openness and composability, but there is still competition across ecosystems. How do you view this issue, Stani?

STANI (Aave): I actually think Aave's growth has largely benefited from what these teams are building, which is also a crucial part of Aave's story.

Composability is key. Collateralization is one of the core aspects of the entire DeFi product ecosystem. Collateral and yield opportunities may occur in other protocols, which, in turn, require liquidity support. Aave is the place that can serve various innovations.

I believe Aave is unlikely to do what these teams are doing because we benefit from this composability. This is also one of DeFi's value propositions and why many people like to build products in this space — you don't need to call various APIs, just build an interesting product that automatically integrates with other protocols to form a complete product.

This is what makes this space exciting. We will continue to focus on lending, delve into how to manage collateral more efficiently, and how to safely access more opportunities. This, in itself, is a massive task.

Host: I'd like to delve deeper into this topic. Do you remember the early days of DeFi? Back then, everyone thought DeFi was like MakerDAO v0, completely on-chain, endogenous, with no connection to the outside world or fiat.

STANI (Aave): Oh yes, we've come a long way.

Host: Now, when you look at Aave, there's Horizon, which is a permissioned RWA protocol; you even collaborated with BlackRock to launch products. Hyperliquid's USDH is issued by Stripe/Bridge — a large fintech company.

It is now evident that DeFi is not detached from CeFi (or the broader centralized world), but is rather a continuum. You are constantly moving within this continuum. How do you view this trend? Are we moving towards a future where DeFi and the centralized world are deeply integrated? Has the vision of "pure DeFi" come to an end?

JEFF (Hyperliquid): I believe DeFi is fundamentally a technology rather than a "world." The past few years may have made it seem like it is a standalone ecosystem, but I think fundamentally, blockchain is a technology that enables global user consensus.

This is a better technology used to handle the most critical part of human collaboration—money and financial assets. So, in my view, this is not a fusion or competition of two worlds but rather the entire financial system upgrading its technology stack. And better technology always wins.

GUY (Ethena): I think the "pure DeFi" you described now only exists in a few applications. The issue lies in the difference in user groups: there is a class of users who care deeply about "full decentralization," they are early adopters in the crypto space.

But most of the later entrants into this space are more pragmatic. They see some decentralization features as important but do not need to implement them all. They are more concerned about scalability and user experience.

The truly successful applications in this cycle have almost all made compromises in the "decentralization vs usability" dimension. They are not completely decentralized, but they have solved other more important issues such as scalability, usability, etc.

So, the trend you mentioned will definitely accelerate. If you have global ambitions, you cannot only serve those 2,000 users who care about "extreme decentralization." The new generation of entrepreneurs aims to build globally-oriented products.

STANI (Aave): My perspective is slightly different. I think the term "decentralization" is not very accurate anymore. What really matters is "resiliency."

People initially cared about decentralization because it could bring system resiliency, avoiding single points of failure. This is the core of what we truly care about.

Governance is also part of resiliency. You can design governance mechanisms that are resilient.

In the past few years, we have seen that decentralized lending did not really take off. In 2017, when we started on-chain lending, many centralized lending platforms (such as Celsius, BlockFi, Genesis Lending) were also developing. They raised billions of dollars, building a fully centralized crypto-backed lending model.

However, these platforms are essentially "black boxes," with opaque risk management. Once the market cycle turns bearish, these centralized lending platforms almost completely collapse.

Now, almost all lending activities have shifted to on-chain. On-chain lending not only has higher pricing efficiency but also lower operating costs. For example, while centralized lending rates may be 9%-12%, DeFi lending costs only 5%.

So my conclusion is: for traditional finance, fintech, or centralized players, directly integrating with Aave and providing services to users is much easier than building a lending business from scratch and managing risk.
The reason DeFi lending performs so well is because of its transparency, smart contract execution, and other features that contribute to a more robust financial system. This is the result we see.

In the future, we will continue to move in this direction. For example, many stablecoins in the centralized world are now based on Real World Assets (RWA), and we have already crossed that threshold. Although we no longer have all the characteristics of that "purely on-chain" nature we had in 2020, we have retained some key attributes that can bring about better financial products.

Host: So centralization is not the goal but a means to an end. What we really want is resilience, reliability, and sustainability. And these new systems can indeed provide that.

STANI (Aave): No one will use a financial product just for the sake of decentralization, such as a system that requires 10 or 20 people to argue on a governance forum. What people truly care about is whether the system is stable and can effectively mitigate risks. If you can achieve risk control and system transparency, users can make better financial decisions.

DeFi Risks

Host: So let's talk about risks, a great segue.

There are now many complex strategies in DeFi, such as yield farming, Pendle's revenue splitting, LST/LRT arbitrage trading, and so on. Of course, there are also old issues like smart contract risks and forced liquidation.

What are each of your most concerning risks? After all, this is the crypto industry, there will always be the next rug pull, the next wild event. Where do you think the next "unknown risk" might come from? Jeff, what are you most worried about in the Hyperliquid ecosystem?

JEFF (Hyperliquid): This question is not easy to answer. I am seriously thinking about it. For me, the biggest risk is actually "execution risk".

Host: That doesn't count; I mean a real risk.

JEFF (Hyperliquid): I am serious. We always tend to imagine some "black swan events," but in reality, most system failures are not due to sudden accidents but rather due to "chronic illnesses."

Just like human health issues, what truly leads to death is often not an accident but rather long-standing underlying problems. This "slow and painful decline" is the biggest risk.

Of course, there is also the explosive risk you mentioned. We strive to ensure mathematical solvency in protocol design rather than relying on the price of off-chain assets or collateral.

A good system should not rely on these external assumptions. The vision of DeFi is to build a mathematically consistent system that ensures the on-chain logic alone can sustain stability.

However, I believe that if Hyperliquid ultimately fails, the reason may not be technical or market-related, but rather that as a community, we did not build something truly valuable.

As a project evolves, it is easy to become complacent, feel like "we have already succeeded," and then start resting on our laurels. This kind of arrogance is very human but is also one of the greatest risks.

This is not just a Hyperliquid issue but a DeFi-wide issue. We have come a long way, but there is still a long road ahead of us. We have not yet truly convinced the traditional financial system to take this field seriously.

Host: So, you're saying the real risk may be complacency and a lack of vigilance. GUY, how do you see Ethena's risk situation?

GUY (Ethena): Overall, I think the current system is much safer in many ways than the previous cycle. For example, as Vitalik mentioned on Matters two weeks ago, the proportion of smart contract attacks to TVL has been steadily decreasing since the last cycle.

From an engineering and technical perspective, on-chain security has indeed improved. Another aspect is the issue of systemic leverage. While leverage still exists in the system, it is not as opaque on the balance sheet as it was in the previous cycle, where no one knew how much risk was hidden inside.

For example, centralized institutions like Genesis, Three Arrows, as STANI mentioned, had very unclear leverage structures. However, in this cycle, similar leverage positions are not as evident. In a sense, the collapse of Terra is also a form of leverage—it has USD that is a liability unsupported by real assets in the system.

So from a technical and leverage perspective, it is indeed safer now. But there is one counterexample: we have also seen an exponential increase in system scale. STANI is the best example— the on-chain balance sheet of their protocol has grown 10x since 2021.

Now the scale of these on-chain protocols is approaching that of the 33rd largest bank in the United States. These numbers are massive, and if something goes wrong, the impact will be severe.

But this is also the essence of our existence— we are not here to build trivial things. We should be excited to build "systemically important" infrastructure, just in a responsible manner.

Another point is that when Ethena was first launched, many people expressed concerns about our risk model, worrying about how we would integrate into the entire system.

But I believe our current approach is already one of the safest versions within the "dollar structure." But at the same time, we have also opened the "Overton Window," allowing anyone to call "a loan to Ken's Bicycle Company" a "stablecoin."

It seems that we are now packaging everything as a "dollar" and then calling it a stablecoin. I hope everyone will take a moment to pause and think during this process: have we pushed the "what can be called a dollar" too far.

Host: STANI, what do you see as the biggest risk facing Aave?

STANI (Aave): I would worry about all risks, so you don't have to worry (laughs). Mainly because in DeFi, there are too many modules that need to be managed and monitored simultaneously.

Over the past few years, certain risk categories have significantly decreased. For example, smart contract risk— many protocols have been validated for years and are highly mature. Asset-type-related risks are also gradually maturing, and there are many excellent risk service providers helping lending protocols manage these parameters, performing exceptionally well.

So from that perspective, I'm not so worried at the moment. But I do think that the real stress test for lending protocols comes during a market downturn.

In a stable or rising market, everyone easily gets excited about listing various assets. But the true risk management capability is only tested during a market downturn, when liquidations are triggered.

Over the past five years, Aave has experienced over 300,000 liquidation events, with a total liquidated amount of $3.3 billion, and the largest single liquidation ranging from $200–300 million. This demonstrates that DeFi can build resilient systems.

What I'm currently more focused on is "Counterparty Risk". For example, when an asset is integrated into Aave, we assess the protocol or asset risk behind it. How is it managed? Is there any kind of permission or centralization control?

This also relates to the centralized elements you just mentioned. Some assets may have smart contract-level control logic or centralization features behind them.

In contrast, I'm more concerned about these centralized aspects. Because in a purely smart contract world, everything is visible and verifiable. But centralized assets require more transparency.

Credit to the team at Credora, they have made a lot of efforts in terms of transparency, allowing us to see more clearly how the assets operate.

I think this is one of the advantages of DeFi: you can really see how the sausage is made.

Rapid Fire

Host: Okay, we're almost out of time, so let's move on to the rapid-fire segment. Each person quickly answers a few questions. Who do you consider your biggest competitor?

STANI (Aave): Banks

GUY (Ethena): Circle

JEFF (Hyperliquid): We're not competing with anyone

Host: What do you think is the most common mistake made by most DeFi founders?

JEFF (Hyperliquid): Early focus on infrastructure

GUY (Ethena): Too insular, only focusing on the niche DeFi user base

STANI (Aave): Overlooking composability