Maker and Aave have emerged as two of the biggest names on the DeFi scene and investors have been quick to take heed of how quickly the native tokens of such projects have come to dominate the wider cryptocurrency market. But of the two, which is the better investment?
The rise of DeFi over the past two years has changed the cryptocurrency market beyond all recognition. Whilst Bitcoin still dominates the top spot, smart platforms like Ethereum, Cardano and Binance Smart Chain now compete to offer the best platform for ever-more innovative DeFi projects. Both Aave and Maker happen to be built on the Ethereum platform.
Whilst DeFi has the potential to revolutionise the world of finance, it has given cryptocurrency investors more to think about. Projects like Maker and Aave are much more complex and require a deeper level of understanding than the likes of Bitcoin or Dogecoin. However, most inventors agree that DeFi represents the future of cryptocurrency, so being able to discern between leading projects is going to become increasingly important in the coming years.
So when looking at Maker vs Aave, which represents the better opportunity? To answer this, we need to take a closer look at each project and consider what top analysts are predicting for each one’s future price performance.
Aave vs Maker - The Key Differences
On the surface, Maker and Aave have a fair amount in common. Both are cryptocurrency lending protocols built on the Ethereum blockchain and both offer a way in which crypto holders can put their tokens to work and earn rewards by providing liquidity. However, under the surface, the two projects work in very different ways and each has its own strengths and weaknesses.
Maker
Background
Maker is one of the oldest cryptocurrency lending protocols on the market, having launched in 2015. The MKR token then became the first tradable token to exist within the Ethereum blockchain. However, the real innovation of the project came with the launch of MakerDAI - the project’s stablecoin.
Stability is arguably Maker’s standout feature when compared with other leading DeFi projects. Whilst the inner workings are far too complex to be covered in this article, it’s enough to know that Maker works by minting DAI - a type of stablecoin that is not backed by fiat reserves, but maintained through management of collateral locked into the platform.
Maker is a pioneering project with some pretty strong credentials. Its development team includes Rune Christensen, who started the project in 2014, as well as president Steven Becker, who has an extensive background in the finance industry, and economist Shefali Roy. Taken together, Maker’s leadership have the credentials between them to oversee every aspect of a DeFi ecosystem.
Key Fundamentals
Users on the MakerDAO can lock their Ethereum-based cryptocurrency into the Maker Vault to borrow Maker DAI. The platform allows users to borrow up to 66% of the value of their collateral. So if you add 100 ETH, then you can borrow 66 DAI, for example.
The value of DAI is kept stable by Makers algorithm and the MKR token. If the price of the stable coin fluctuates higher than the US dollar, then Maker (MKR) tokens are created to stabilise the price. Conversely, if prices drop, then more MKR is burned.
By locking in their cryptocurrency and borrowing against it, users on Maker can put their cryptocurrency to work without giving up their holding. In other words, if you think that Etheruem is going to soar in value over the next five years, then rather than have it sitting in your wallet until that time, you can use it to borrow DAI, which in turn can be spent or used as an exchange for other ETH tokens which you can then buy and sell to take advantage of market volatility in the interim.
Supply and Demand
At the time of writing, Maker is the second biggest DeFi project on the market, with a total of $16 billion locked into its protocol.
Because the MakerDAO system is intended to track with the US dollar, MKR, in theory, experiences less volatility than some other cryptocurrencies. Maker cannot be mined and new tokens are only created in line with fluctuations in the price of DAI against the US dollar.
There is a current circulating supply of 977,631.04 and a maximum supply of 1,005,577, with MKR consistently seeing 24-hour trading volumes in excess of $112 million. Continued high demand, as well as a limited supply that is unlikely to change wildly overnight, means that MKR certainly has potential as an investment.
Read Also: 15 Reasons Why You Should Invest in Maker (MKR) Today
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Aave
Background
Aave is a cryptocurrency lending platform that was set up in 2017 by Stani Kulechov. Originally called ETHLend, it rebranded in 2018 following significant investment. The project also grew from a fairly simple peer-to-peer lending platform, into a system of lending pools allowing users to profit from providing liquidity.
Users can supply cryptocurrency to the AAVE protocol, thus supplying the liquidity for the lending aspect of the project. Those staking their tokens then receive a share of interest paid on the loans from a particular pool.
The developers behind the project also launched Aave Pro - a version of the protocol aimed at institutional investors. This version of the platform has a mandatory KYC process, which means it can meet the regulatory requirements needed to offers services to institutions.
Key Fundamentals
Like most DeFi projects, Aave is complicated but a key aspect of the platform is that borrowers must provide my collateral than they borrow, to allow for market volatility. At the time of writing, Aave is the biggest DeFi project on the market, with $13 billion locked into its protocol.
Borrowing from Aave is facilitated by algorithms, meaning loans are taken out of pools rather than matching a borrower with a lender. To ensure there is always a supply of cryptocurrency for lending, the Aave platform has an in-built mechanism that increases interest - and thus rewards earned - when pools are running low, which entices lending. Conversely, if there is too high a supply of crypto in the liquidity pools, the interest rate is lowered to encourage more borrowing.
Underpinning the whole project is the AAVE token, an ERC-20 token that has several uses. Firstly, Aave is used as a means of stabilising the supply of capital in the system. If for whatever reason there is a shortfall, AAVE stored in the “safety module” is released for sale to make up the deficit.
AAVE is also the project’s governance token, meaning holers a vote on certain aspects of the project and the direction it moves in. These changes might include changes to liquidity pool rates, updates to the ecosystem or how funds are managed within the protocol.
Supply and Demand
At the time of writing, AAVE has a circulating supply of 13,654,052.59 of a maximum supply cap of 16,000,000. A small amount of AAVE is also burned as part of the fee system. In theory, this can protect AAVE agains significant deflation and, assuming demand remains high, should have a positive impact on the token’s price over time.
As we’ve noted above, the AAVE token plays an essential role in the operation of the Aave ecosystem. Not only does this mean that AAVE is likely to remain in high demand, but the developers behind the project have expressed a desire to hold 20% of new AAVE tokens in reserve to support operations on the platform.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Aave vs Maker: Which Is The Better Investment?
On the surface, it would appear that Aave and Maker are pretty much neck and neck when it comes to investment opportunities. In terms of total funds locked into DeFi projects, Aave and Maker hold the number 1 and number 2 spots respectively and it certainly appears that they are emerging as the dominant projects in the space.
That being said, investors should be aware that DeFi is still relatively new and we are likely to see more projects emerging in the near future - any one of which could be a potential rival to both Aave and/or Maker.
To get an idea of what to expect with regards to future price movement, we need to consider several information sources.
Maker Vs Aave: Price History
Before looking at any Maker or Aave price predictions for the future, we should first consider how each token has performed in the past. This data can then be used to inform future price predictions and tell us something about how each project is likely to respond to certain market forces.
MKR
Maker has seen some pretty impressive volatility since it appeared on most trading exchanges in 2017. As DeFi was and is still an emerging trend, the price trajectory of MKR hasn’t tracked as neatly with Bitcoin as many other cryptocurrencies.
For example, in December 2017, MKR was trading at around $1,581. It then dropped significantly to around $1,017 before the month was out. However, just a month later, in January 2018, the token surged to a then high of $1,789.
Whilst the crypto market downturn of 2018 sent MKR down to just below $500 in May, the token was quick to start its recovery and it had soared back to $1,129 by May of that year. MRK then bounced between $400 and $600 for much of the rest of the year.
In March 2020, slumped to an all-time low of $168.36, before recovering to just over $730 in the summer of that year. MKR mostly held out above $500 for the rest of the year before 2021 saw DeFi really take off and several market-wide upswings carried MKR to record highs. First, the token reached $2,500 in February, before May saw it surge to its all-time high of $6,292.
Whilst there have been further peaks and valleys since May, at the time of writing MKR was trading at a respectable $2,005 - having returned over 360% in the previous year.
AAVE
AAVE price data only goes back as far as the second half of 2020 so there isn’t quite as much information to go on. However, for that period its trajectory has been similar to MKR’s, if slightly less volatile.
In October 2020, AAVE was trading at around $50. It then proceeded to grow fairly steadily, finishing December at $81 per token. By January 2021, it was at approximately $198 before a market-wide upswing took hold. However, AAVE stood out from other cryptos at this stage, in that it had been on a steady upwards trajectory for several months.
By the end of the first week of February 2021, AAVE had soared past $500. It then peaked at $529 that same month, before changing direction and going into steep decline, hitting $324 in the first few days of March. AAVE then saw some very chaotic price movement over April, with its value bouncing between $310 and $470.
As with many other cryptocurrencies, May 2021 saw AAVE hit its best price to date. Having started the month trading at $444, it soared almost 50% to $661 going into the third week of the month. However, this wasn’t to last and AAVE then took a steep downturn, sinking as low as $184 by the end of June, with few direction reversals during that time.
Throughout August and September the AAVE chart has continued to move significantly in both directions, with very little predictability. At the time of writing, it was trading at $160 per token.
Maker Vs Aave: Future Predictions
Looking back at a tokens previous price can tell us a lot, but ultimately investors are more interested in what is likely to happen in future. Cryptocurrency price forecasts are never guaranteed, but they can be useful in managing expectations and deciding on an investment strategy.
Maker
Judging by the forecasts we encountered, it seems there are mixed expectations for Maker in the coming months.
DigitalCoinPrice is predicting fairly significant growth. According to its technical analysis, MKR will reach $2,955 in July of 2022, then experience a slight downturn before the end of the year. However, in 2023 it is expected to exceed $2,744 and potentially reach $3,744 in 2024.
WalletInvestor is expecting MKR to grow at a steadier rate. It has the token reaching an average trading price of $2,500 in August2022 and, whilst it does foresee a slight downturn, MKR could hit $2,200 by December. It also predicts that MKR could reach as high as $3,300 in May 2023.
Elsewhere, TradingBeasts is far less optimistic. It actually sees MKR going into decline over the next year or so. However, despite a relatively protracted downturn, TradingBeasts still sees Maker hitting a potential high of $3,951.573 by the end of 2024.
Check Out: Maker Price Predictions
Aave
Whereas Maker is expected to see periods of depressed pricing, most market analysts appear to be predicting fairly linear growth for AAVE. DigitalCoinPrice expects Aave to reach a potential trading price of $239 in July 2022 and experience some volatility before finishing the year at around $237.
Meanwhile, WalletInvestor expects AAVE to slowly decline through 2022 and end it with a price of $8.120. For 2023 the site predicts a follow-up to the decline, having the coin finish the year at merely $16.39.
Finally, TradingBeasts, usually among the more reserved analysts, believes that Aave might experience slowth growth throughout 2022-2023 and by the end of 2024 reach $255.
Don't Miss: Aave Price Predictions
Aave Vs Maker: Expert Opinion
In addition to weighing up forecasts and past price performance, it's also worth considering what industry experts have had to say about Maker and Aave, as these can often tell us a great deal about market sentiment that isn't necessarily picked up in the charts.
Galaxy Digital’s Mike Novogratz - often noted for his insights on the cryptocurrency market - believes that AAVE is amongst a group of tokens that has the potential to “blow up the world in the next five years.” He added that DeFi projects “want to take the banks and tear the banks limb from limb, that want to replace JPMorgan and the New York Stock Exchange and so I put some money into those things. It's much riskier, but if it works, it's going to be a much bigger payoff."
Interestingly, Novogratz does not include Maker in his list, however, the number two DeFi project is not without its supporters. Speaking of MKRs recent price surges, Ryan Watkins, a research analyst at Messari, said that “Recent excitement across the industry provided the recipe for [MKR’s value] to finally be recognized,” suggesting that MKR could be primed for improved performance in future.
Aave Vs Maker: Conclusion
The bottom line here is that Aave and Maker are two of the top DeFi projects on the market and both have a huge amount of potential for future growth. As the possibilities of cryptocurrency and blockchain continue to expand, there’s every chance that lending platforms will be increasingly utilised.
The price forecasts we looked at all pointed to growth for both tokens, although Aave probably has the edge when it comes to consistency. Aave is also trading at a much lower token price, which is something many investors prefer, despite returns effectively being unaffected.
It’s worth pointing out that DeFi is still a relatively new phenomenon and, whilst Maker and Aave have emerged as the dominant projects, there position is not so well established that they could not be unseated in the near future. Potential investors will not only need to weigh up Maker vs Aave, but also consider other prospects in the DeFi space.
Ultimately, when it comes to Maker vs Aave then the latter probably has the edge, but we believe that both could have their place as part of a balance crypto portfolio - especially if you are looking to increase your exposure to DeFi tokens.
How To Invest In Cryptocurrency In 2022
If you are looking to buy Maker, Aave, or any other top cryptocurrency, then you’ll need to find a reputable broker that can provide access to the market. Fortunately, one of the most trusted brands in retail trading - eToro - lists both tokens and offers a simple yet powerful trading platform that’s suitable for novice and experienced traders alike.
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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
FAQs
Aave vs Maker - which is the best DeFi platform?
Aave and Maker both have their strengths and weaknesses. From an investment perspective, they are pretty evenly matched but Aave arguably has the edge due to its lower token price and slightly more optimistic price predictions from leading analysts.
Can Aave double my money in 2022?
Whilst Aave has seen a fair amount of volatility since it started trading. Realistically, it will take a few years to double an investment - assuming it continues to grow.
Where can I buy Maker?
Maker isn’t as widely listed as some major tokens, but you’ll find it listed on most top exchanges. We recommend eToro for most investors, as its an easy to use platform that also happens to be one of the most trusted names in retail trading.
Which crypto should I invest in in 2022?
Many investors are looking ahead to 2022 and wondering which cryptocurrencies to buy. Whilst we can’t expect the same first-quarter price surges we saw this year, now is certainly a good time to make some investments. In particular, most investors will want to consider adding a couple of the leading DeFi tokens to their portfolios.
Is Aave the best DeFi project?
Aaave is currently the biggest DeFi project in terms of locked-in funds, but whether it is the best or not will depend on your individual requirements. There are numerous DeFi projects out there and they all have their strengths and weaknesses. As always, research is important before making any investment decisions.
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