Why can a dollar in the bank earn 10 times, but DeFi lending cannot?
Recently, a set of data has been repeatedly forwarded in the crypto circle:
For the same 1 dollar, the profit it brings to the bank is about 10 times that of depositing 1 USDC on Aave.
Thus, a very natural and also very dangerous conclusion began to spread:
Is DeFi lending fundamentally unviable from a business model perspective?
However, if you really break down the borrower structure of Aave, you will find an awkward but more realistic answer:
The fact that DeFi lending earns less is not because it is 'not advanced', but because it is currently not doing 'credit' at all.
One, banks do not earn interest, they earn 'economic growth'.
Why can banks make money?
On the surface, it's the interest rate spread;
Essentially, banks convert low-cost deposits into real-world credit demands such as corporate expansion, infrastructure construction, real estate, and mergers and acquisitions.
What banks earn is that portion of the entire social economic growth.
What about DeFi lending?
What it serves today is almost entirely the internal demand of the crypto market.
In other words:
Banks leverage factories, companies, and cities;
DeFi lending leverages K-lines and yield curves.
These two things determine that the profit ceiling is not at the same level from the very beginning.
Second, those on Aave are not here to 'borrow money for business'.
Aave's current outstanding loans have exceeded 20 billion dollars, which seems very large, but the problem is:
This money has almost not flowed into the real world.
The vast majority of borrowing concentrates on three types of behavior:
First, by collateralizing yield-bearing ETH, then borrowing WETH, profiting from the difference between staking yields and borrowing rates, essentially a form of structural arbitrage of 'being paid to leverage', currently accounts for the bulk of Aave's loans, and is concentrated in a very small number of whale accounts.
Second, using yield-bearing stablecoins for cycles bets on incentives and funding rates, as long as the conditions change, the scale will rapidly collapse.
Third, using volatile assets to collateralize borrowing USDC or USDT, either to leverage long or to throw stablecoins into new farming opportunities, this type is the main source of Aave's interest income.
You will find a common point:
There are no long-term investments, no business expansions, no borrowers 'taking money to create cash flow'.
Aave is not an 'on-chain bank', but more like a liquidity hub serving arbitrage, leverage, and yield cycles.
Third, this is destined to prevent DeFi lending from earning 'bank money'.
Why will this lower the profits of DeFi lending?
The reason is actually very simple.
First, the cost of funds in DeFi is not low.
To attract USDC deposits, protocols often need to offer rates close to or even higher than U.S. Treasury rates; while the cost of deposits for banks relies on regulation, insurance, and habit, remaining low for a long time compared to the risk-free rate.
Secondly, on-chain lending does not engage in true 'credit'.
It relies on over-collateralization and instant liquidation, essentially doing automated margin management, rather than taking on default risk, thus it naturally cannot obtain credit premiums.
Finally, DeFi is an extremely open market with almost no moat.
As long as there is an interest rate spread, it will be quickly flattened by arbitrageurs; while the banking industry itself is an oligopoly system protected by regulation.
So the bank can earn 10 times, not because they are smarter, but because they stand on a more fertile ground.
Four, what truly matters is not 'how much you earn now', but 'who you will serve in the future'.
But if you assert that DeFi lending has no future because of this, you may be missing the point.
Looking back at crypto history, the truly successful tracks almost all have a common characteristic:
They ultimately detached from the coin price itself.
The scale of stablecoins is far more stable than that of altcoins;
The activity of prediction markets does not completely follow the market trends.
And lending is also heading down the same path.
As RWA, stocks, and off-chain credit assets are brought on-chain, with more complex risk assessments and credit intermediaries emerging, DeFi lending is no longer just serving 'coin traders', but begins to try to serve those who do not care about ETH price fluctuations, but care about funding costs and cash flow.
Once this transformation truly occurs, the profit margins, valuation logic, and market position of lending protocols will undergo a qualitative change.
Five, a summary in one sentence
Today's DeFi lending earns less because it is still just a 'leverage machine within crypto';
and the real big money will come on the day when 'credit starts to detach from coin prices'.
When on-chain lending is no longer just an amplifier of crypto GDP, but begins to become an independent credit system,
only then will banks and DeFi stand on the same valuation table for the first time.
And that day may be closer than many people think.
