Aave launches a savings yield app, with up to 9% APY to compete against the low interest rate era of traditional banks.

The lending protocol leader Aave Labs has announced the launch of a brand new savings app, featuring a maximum Annual Percentage Rate of 9%, real-time deposit and withdrawal, compound interest every second, and a protection limit of up to 1 million dollars, challenging the long-criticized low interest rate system of traditional banks. On the other hand, the ongoing battle in the American banking industry regarding the ban on interest-bearing stablecoins is also expected to push more users towards Decentralized Finance.

Aave launches high-yield savings app: up to 9% Annual Percentage Rate to attract customers

Aave Labs' newly launched Aave App has once again solidified its positioning as a “on-chain bank,” offering a 5% base APY. Through identity verification (KYC), inviting friends, and automatic deductions (Auto Saver), users can increase their interest rate to a maximum of 9% APY.

Aave emphasizes that its lending market is “over-collateralized,” meaning that there are assets backing deposits that exceed 100% as collateral, and the source of income comes from the interest rate spread provided to users by the platform.

Aave targets the pain points of traditional bank accounts: many restrictions, low interest rates.

Aave also criticized traditional banks in its announcement, pointing out that the average savings account has only a 0.4% APY, while high-yield deposits usually only range from 3% to 4% and may have withdrawal restrictions.

On the contrary, the Aave App allows for on-demand deposits and withdrawals, calculates interest every second, and offers regular fixed amounts, enabling users to see changes in their earnings instantly. It also provides up to 1 million dollars in fund protection, aimed at boosting public confidence in DeFi savings tools.

(Push under Aave has obtained European MiCA approval to offer zero-fee stablecoin deposit and withdrawal services)

Support for bank and stablecoin deposits: bridging fiat to DeFi

Additionally, the Aave App supports deposits from over 12,000 banks, financial cards, and stablecoins, allowing users to instantly funnel funds into Decentralized Finance. Aave states that it hopes to bring DeFi savings tools into the mainstream market through this design, making it a true alternative financial service.

The app is first launched on the Apple App Store, and the Android version is currently under development. A waiting list is now open.

Regulatory Gray Area: Stablecoin Interest Ban Fuels a Blooming One-Stop Yield App

Although the US GENIUS Act prohibits stablecoin issuers like Circle and Tether from directly offering Interest, it does not restrict third-party platforms from building yield products on stablecoins.

As a result, companies like Coinbase, Kraken, and Aave have begun to create “bank-like” services, including the launch of a one-stop super app by Coinbase and Kraken that covers features such as yield, payment, and social aspects (Super App).

(Coinbase launches a 4.5% Interest Rate to seize the market. Is the yield-generating stablecoin targeting bank deposits truly risk-free? )

Banking industry groups feel threatened and have repeatedly united to pressure the Treasury Department, demanding that the stablecoin interest ban be extended to all crypto platforms.

Ignas: Bank resistance will drive more people into DeFi.

DeFi researcher Ignas pointed out that once stablecoins can no longer offer interest, funds will be forced to flow into the DeFi lending market, driving protocols like Aave, Maker, or Curve to profit from it. He believes that more user-friendly fiat on-ramps like Aave will accelerate the movement of funds onto the chain:

The more banks try to stop stablecoin interest, the more likely they are to push more people into the crypto world.

This article discusses Aave's launch of a savings yield app, with a maximum 9% APY competing against the low interest rate era of traditional banks, first appearing in chain news ABMedia.