Thread by @TaikiMaeda2

I believe we are approaching a period of DeFi renaissance after 4+ years of extreme underperformance.

A lot of these DeFi OGs are now in the category of "high float, low FDV" coins with strong catalysts on the way.

Here's why I believe $AAVE @aave is poised to outperform

This thread will be spread into two sections:
1) Addressing the elephant in the room: the AAVE/ETH pair has been bleeding endlessly for years, what makes me think the bottom is in?
2) What's the significance of the most recent AAVEnomics update with the $AAVE fee switch?

If you prefer learning about the $AAVE thesis in video form, check out the post below.

https://x.com/TaikiMaeda2/status/1817921592598663286

So let's first address the AAVE/ETH ratio.

Just because they have underperformed for 4 years does not mean that they will underperform forever.

There's strong precedence that DeFi tokens (category leaders) that introduce value accrual significantly outperform ETH.

A lot of you may remember my $MKR trade over a year ago when I was banging the drum for a "hated rally." A hated asset is synonymous with an asset that no one owns. With the right catalyst, these coins can violently reprice to the upside.

https://x.com/HFAresearch/status/1678462356911984641

On June 23, 2023, $MKR introduced the Smart Burn Engine. This proposal gave way for the DAO to start buying back their own token with protocol profits, resulting in consistent buy pressure from interest payments from billions of tbills.

If you bought $MKR on the day of the proposal, you would have outperformed ETH by over 100%.

MKRETH WAS going to zero, but a governance proposal to introduce direct value accrual put in a bottom for $MKR. Since then, MKR is up over 300% against USD and 130% against ETH.

I believe a similar set up is present for $AAVE. On July 25, @lemiscate put forth a "Temp Check" proposal to introduce a "Buy and Distribute" model for $AAVE using excess protocol profits.

The timing for execution is uncertain, but I would expect it going live by EOY.

Admittedly, AAVE/ETH looks horrible and calling a bottom is a dangerous game to play. However, this is one of those situations where, "If AAVE/ETH does not bottom on a fee switch proposal, when will it ever?"

The risk/reward for longing $AAVE is better than ever.

The biggest risk to the trade is the "trigger milestones" for the buybacks not being met. These are:
- $GHO to hit 175M supply
- Market to be able to absorb a big $GHO sell with minimum slippage
- Sustainable profitability to the DAO

$GHO supply has surpassed 100M recently, so 175M seems attainable in a couple of months. They can also utilize its treasury of >$60M to incentivize liquidity.

I believe $GHO growth is the most important metric to look at as it's easily the highest margin product in scale.

The DAO has also taken great steps to lower costs and introduce new revenue drivers, so the outlook for future profitability looks bright.

Still room for improvement but these teams are cleaning up their act while no one is paying attention.

As the top decentralized onchain bank, they have the brand and lindy-ness that cannot be replicated by new players.

As demand for leverage grows and they expand to more chains, AAVE profits should scale linearly with DeFi TVL growth and adoption. Why use any other money market?

Reasons to bet on AAVE/ETH bottoming:
• MKRETH bottom precedent
• High float, low FDV coin with proven PMF
• A clear winner in an underowned category

Everyone agrees DeFi has PMF. Where people disagree is whether or not these tokens are investable. AAVEnomics changes this.

Actions speak louder than words; I am currently staking $AAVE acquired at ~$92. I cannot dump on you as there's a 20 day cooldown period (at least it's not 21 days lol). In fact, YOU can dump on ME!

I am betting on AAVE outperformance over a multi-month horizon into 2025.

A lot of you discovered me through my AAVE/Polygon videos in Q2 2021. I was told that my videos were the reason a lot of you started your onchain journey.

Now we're going full circle, staking $AAVE on ETH mainnet like a crazy person. Am I being exit liquidity again?!

The memecoin meta has made a lot of people jaded about crypto. For the vibes to improve, people need to believe in something. Believe in the tech.

I choose to believe in the protocol that kickstarted my journey. I choose to #BelieveInSomething.

Do YOU believe in something?

Make fun of me and call me midcurve all you want, but I believe in the tech. I believe fundamentals matter. And I am placing my bets.

And also, if there’s anyone in the world that can put the bottom in for DeFi, it has to be me… right??? Be the bottom that you want to see 🍑