PoS Discussion | DeFi Protocol: Umee vs AAVE

How to understand “Umee is the Aave on Cosmos”?

Published in

Wetez Studio

3 min readFeb 18, 2022

When a blockchain user tries to learn about Umee, he may catch Aave — one of the head DeFi protocols — in various written or video materials. “Umee is the Aave on Cosmos”, people always say. In this article, Wetez will give a brief comparison of the two DeFi protocol: Umee & Aave.

Umee’s connection to Aave?

uToken vs aToken

Aave was a pioneer in the DeFi protocol and Umee, a latecomer, designed the protocol with the strength of a giant’s shoulders. If you’ve ever looked through Umee’s whitepaper, you might begin to understand how often people mention Aave when talking about Umee: “(The uToken’s) token model is heavily inspired by Aave”, says the Umee whitepaper.

On the AAVE platform, when a user deposits an asset, they will receive an aToken mapped 1:1 to the asset deposited as proof of savings, and that aToken will continue to generate income; when the user exchanges the aToken for the asset previously deposited, the aToken will be destroyed. umee has incorporated this method of pledging assets and earning interest into its own protocol, specifically presented as uToken.

Cross-chain DeFi hub Umee & the ever-escalating Aave

Umee is a cross-chain DeFi hub based on Cosmos, with cross-chain lending functionality being the first goal the Umee network is working towards, followed by expanding the supported networks to enhance its cross-chain strength. The roadmap disclosed in the Umee discord community shows that the Umee team has already implemented the basic functions of the network, and the communication module with Ethereum is also complete. After the mainnet launching, it will also support Polygon, Arbitrum, Optimism, Solana and other mainstream blockchains outside the Cosmos family.

And Aave has been polishing and upgrading its product over the last two years of development. Expanding from an Ethereum-only lending protocol to a multi-chain lending protocol that also supports networks such as Polygon and Avalanche. And on 5 November 2021, Aave v3 was officially announced to the community, with a Portal feature that will allow assets on different blockchains to flow freely on the Aave v3 marketplace, i.e. cross-chain lending through the Aave Portal.

Difference between Umee and Aave?

Umee is built on the Cosmos SDK, while Aave is a project that started on the Ethereum mainnet. This different background predestined Umee and Aave to differ in the direction of their subsequent expansion.

The IBC communication protocol allows Umee to communicate with many Cosmos blockchains securely and quickly; thanks to the Gravity Bridge, Umee can also connect to Ethereum with ease after deployment. The project will be built around the “cross-chain” ecosystem, which will slowly expand from Cosmos to cover most of the mainstream blockchain networks.

Backed by the development of the Ethernet ecosystem, Aave continues to improve its DeFi function with the support of a lot of traffic and data, and has grown to be a giant in the DeFi market. The upgrade history of Aave v1 to v3 shows that realising cross-chain communication with more networks is indeed one of the goals of Aave’s development. But at the same time, such as the increase of lending modes and the improvement of user experience, etc. are also the main focus of Aave’s current considerations.

Recently, the Umee mainnet has been launched, and the impact it will have on the DeFi market should not be underestimated; while Aave, which is constantly being upgraded, is not limited to Ethereum and moves in the direction of supporting cross-chain DeFi. The development of both is worth to be anticipated in the cross-chain DeFi track.

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