Minterest vs. Aave
Decentralised finance (DeFi) has transformed the financial landscape, and lending protocols have played a key role in this evolution. Among them, Minterest and Aave are two widely used platforms. While both offer decentralised lending and borrowing services, they differ significantly in revenue-sharing, efficiency, and user incentives. This blog post highlights the key distinctions between the two to help users make informed decisions, as shown in the table below:
In a nutshell: Key differences between Minterest and Aave.
How Do Minterest and Aave Work?
Minterest and Aave enable users to deposit assets to earn yield and borrow assets using collateral. However, their mechanisms for yield generation, liquidation processes, and revenue distribution vary.
Minterest introduces an automated lending ecosystem that redistributes all protocol-generated revenue to its users. This structure ensures that those participating in the protocol—whether as depositors, borrowers, or governance members—benefit directly from its operations.
Aave is a well-established DeFi lending protocol with multi-chain deployment and features such as flash loans and stable and variable interest rates. Its model is built around liquidity providers who earn interest, while part of the revenue is directed towards the protocol’s treasury. With the latest governance changes, Aave is implementing revenue-sharing mechanisms, redistributing earnings to governance participants and safety module stakers, making it more competitive in this area (Aave Governance, Cointelegraph).
Interest Rates & Borrowing Costs
The appeal of a lending protocol largely depends on its interest rates, influencing both depositors seeking returns and borrowers managing costs. Lower borrowing costs and higher supply rates can make a platform more appealing for users looking to earn passive income or leverage assets.
Minterest offers some of the best annual percentage yields (APY) in DeFi. With its capital-efficient design and deflationary token economies, the platform ensures users earn more on their supply. Minterest offers up to 50% additional APY from MINTY emissions, NFT boosts, staking, and loyalty rewards. The protocol offers competitive APYs across multiple blue-chip assets, including USDT, USDC, ETH, and WBTC. Operating on Ethereum, Mantle, and Taiko, Minterest maximises earnings APY efficiently.
Additionally, Minterest keeps borrowing affordable by offering some of the lowest annual percentage rates (APR). Borrowers also benefit from MINTY emissions, lowering their effective APR. Minterest differentiates itself by providing auto-compounding incentives, allowing depositors to optimise their earnings without requiring additional manual actions. In contrast, Aave operates under a traditional lending model, where supply and borrow rates fluctuate based on market demand and liquidity availability. Below, there is a comparison table measuring the supply and borrow percentages on the ETH Network:
Liquidation Process: Risk and Efficiency
Liquidation is an important part of DeFi lending platforms, ensuring that borrowed funds remain adequately collateralised. Minterest’s Solvency Engine automates liquidations to maintain stability and reduce user exposure to repeated liquidations, whereas Aave relies on an auction-based liquidation model.
Scenario: Peter’s Liquidation Experience
Peter, an active DeFi investor, has deposited $7,000 worth of Bitcoin (BTC) and borrowed $6,900 in USDC on both Aave and Minterest. When BTC drops 2% from $50,000 to $49,000, Peter’s collateral reaches the liquidation threshold.
Due to Minterest’s automated liquidation process, Peter retains $1,227 more in collateral compared to Aave’s auction-based method. The Minterest Solvency Engine stabilises Peter’s Health Factor (HF) at 1.08, helping him avoid multiple liquidations and further losses. Aave, meanwhile, relies on third-party liquidators who may extract greater portions of collateral to cover risks.
Governance & Revenue Distribution
Minterest is designed to reward active participants, redistributing all value generated back to the community. This approach supports a self-sustaining ecosystem where depositors, borrowers, and governance members are incentivised to contribute and participate in the protocol’s long-term growth.
Aave previously kept most revenue within the protocol’s treasury, but recent governance proposals have set revenue to be shared among stakeholders and governance participants (Aave Governance). This brings Aave closer to a model that rewards active participants, though Minterest maintains a fully user-centric revenue model.
Conclusion: Minterest Leads on User Benefits, Aave Improves Revenue Model
While Aave remains one of the most recognised DeFi lending platforms with multi-chain integration, its latest governance changes improve its revenue-sharing mechanisms and safety protections. However, Minterest still maintains a 100% user-centric revenue model, ensuring that all protocol-generated value is redistributed within its ecosystem.
For users prioritising revenue-sharing and automated liquidation efficiency, Minterest continues to provide a strong alternative in the DeFi lending space. Aave’s recent governance updates bring it closer to competing in this area, making both protocols worth considering based on individual preferences.
For a more precise understanding of why Minterest is the perfect DeFi lending protocol, read this detailed breakdown.
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07, March 2025
