Research report: Ajna Protocol - the next Aave in the DeFi lending track

Author: PentaLab

Project name: Ajna Protocol  

Token: AJNA

Current market value: 15 million US dollars

6-month estimated market value: US$1.16 billion

Rising potential: 7600%

Penta ten-dimensional score: 72 points

Data as of: January 24, 2024

Full report download: pentalab.io

Penta ten-dimensional score: 

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Research report overview:

The lending agreement DeFi track regained its share. After the FTX thunderstorm, traders' trust crisis in centralized exchanges accelerated the rapid development of decentralized finance (DeFi). The DeFi ecosystem has integrated various on-chain finance such as currency issuance, currency trading, lending, asset trading, investment and financing, etc. service function. Among them, DeFi lending is the cornerstone of DeFi, solving users’ needs for mortgage leverage, passive income, and token incentives. It grew rapidly in mid-2020 and reached a peak of US$90 billion at the end of 2021. Later, it declined due to the overall market decline and the impact of several platform security incidents. However, it has always occupied 30% of the DeFi track and will start from 2022. Started to regain promotion. According to the latest data from DefiLlama, as of January 24, 2024, the total TVL of DeFi lending protocols was US$21.1 billion, accounting for 36% of the US$58.1 billion TVL of the DeFi track, second only to liquidity staking, which accounted for 58% of TVL. track. Among them, Aave, JustLend and Compound, the top three in the DeFi lending track, have TVLs of US$6.7 billion, US$6 billion and US$2.1 billion respectively. The market share of the top three is 68%, indicating a relatively high degree of concentration. Aave has opened a peer-to-pool model that controls interest rates based on supply and demand, allowing users to borrow, lend and earn interest on crypto assets without the need for a middleman. Both Aave and Compound are representatives of floating interest rate lending protocols.

Eliminate the vulnerability of oracles, and the peer-to-peer lending market improves the capital efficiency of long-tail assets. Traditional oracle protocols rely on external data to obtain asset prices and are susceptible to short-term manipulation. They are also the source of risks in Compound’s huge (approximately 90 million) liquidation event. In order to solve the vulnerability of oracles, in the field of DeFi lending, some protocols have innovatively proposed no-oracle solutions, which are self-sufficient to improve protocol security, avoid price manipulation risks, and save data call costs. Solutions are mainly divided into two categories, point-to-point models and point-to-pool models. Peer-to-peer lending enables borrowers and lenders to establish lending agreements directly on the blockchain. The disadvantages are high risk of default or fraud, long matching time between borrowers and lenders, and low liquidity. Peer-to-pool borrowing is processed through the process of the lending platform, making it easier to use, with higher liquidity and more flexible loan terms. Ajna creates various currency pair lending pools through a peer-to-peer pool lending model to improve capital utilization efficiency for long-tail assets and even NFTs.

The original MakerDAO core team leads the new narrative of Ajna lending. Gregory Di Prisco and Joseph Quintilian are co-founders of Ajna and were previously the head of business development and trading director of MakerDAO respectively. In addition, MakerDAO’s blockchain architect Bartek Kiepuszewsk serves as a team advisor. Since its launch in November 2019, MakerDAO has grown to become the leader in DeFi lending and the largest decentralized stablecoin protocol. The Ajna team’s experience in market expansion, technology development, risk management and product design helps it build a strong competitive advantage in the rapidly developing DeFi lending market.

Valuation: Although Ajna’s TVL has just passed the threshold of 10 million US dollars, the platform’s sales in just thirteen trading days have Success will be multiplied tenfold, and the potential for growth is unlimited. We also found that Aave’s TVL soared from US$58 million to US$1.35 billion in six months after it was launched online. Considering Ajna’s role in the peer-to-peer pool lending market that eliminates the vulnerability of oracles and its experienced management team, we believe that Ajna has a chance to grow in six months. Within a month, it won 10% of Aave and Compound's shares, corresponding to the estimated TVL scale of US$880 million, and the estimated market value of AJNA of 1.16 billion.

Risk warning: Intensified market competition, difficulty in user education and less than expected market expansion