Morning Minute: Aave Takes Aim at Banks, Fintechs with New Aave App

Aave's latest Neobank app will have TradFi sweating, with more yield and more insurance protection than ever offered before.

Morning Minute is a daily newsletter written by Tyler Warner. The analysis and opinions expressed are his own and do not necessarily reflect those of Decrypt. Subscribe to the Morning Minute on Substack.

GM!

Today’s top news:

There’s a major new player entering the neobank space.

And this time, from a very trusted name in DeFi.

Aave rolled out its new “Aave App” yesterday, as a consumer-facing savings product that looks and feels like a neobank.

The reasons to deposit and use the Aave app are pretty clear:

It also offers other “fintech” features like automated savings, a compounding visualizer for its yield tracking and more, along with state-of-the-art” account security and recovery

The app is launching in early access on iOS, with Android and web versions “coming soon.”

For those unfamiliar, Aave is one of the most established and trusted players in Ethereum DeFi, boasting $30B+ billion in total deposits at time of writing.

“I don’t think people realize just how big this is for the industry. A DeFi app is offering insurance on assets of up to $1 million. The average Bank insures funds $250,000 per depositor. Offering a sleek app + protecting user funds = Onboarding non crypto native users.Aave may just turn into the RobinHood of Lending. Big win for safe DeFi.” - Emperor Osmo, on X

“With the announcement of Aave App, Aave directly competes with banks (and neo banks) by offering a better yield on deposits to the common user. But how competitive are Aave rates historically? We analysed Aave stablecoin APYs and compared with T-Bills across three monetary-policy regimes… Across all three, Aave stablecoin APYs outperform T-bills, NSR, and MMR on average. Aave consistently beats NSR and MMR throughout and while T-bills occasionally surpass Aave, those periods are shorter, rarer, and offer a smaller spread than the stretches where Aave yields are higher. In other words: the valleys are smaller than the peaks, which is why Aave maintains a structurally higher average.” Sealaunch Intelligence, on X

This launch hits at a bigger shift: neobanks rising and challenging in the fintech space.

Fintech apps have already been chipping away at traditional banks for a decade by offering cleaner UX, mobile-first design, and better rates.

But those neobanks were still operating within the old banking rails. Aave isn’t.

Being crypto-native gives Aave an advantage (higher yields, 24/7 liquidity, global reach, and less overhead).

If they can really offer 9% APY with $1M in account protection, they will capture major attention. That is a major differentiator from off-the-shelf savings and MM accounts at most banks.

Stepping back, the concept of neobanks makes sense as a bridge between traditional finance and banking and crypto.

For those unfamiliar, a “neobank” is effectively an app where one can deposit and store dollars/stablecoins, interact with credit cards, send payments and in general function like a banking account.

They often come with more user-friendly apps, are more nimble than the trad banks and often offer better yield. But not the kind of yield Aave is offering.

Several new players are competing in this space, but none with the pedigree of Aave.

If Aave can deliver a smooth, compliant, trustworthy product, it becomes a real contender in the banking market.

A few Crypto and Web3 headlines that caught my eye:

Here’s a rundown of major token, protocol and airdrop news from the day:

Here is the list of other notable headlines from the day in NFTs:

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