Aave vs Maker vs Compound
The three most important DeFi lending protocols. Aave dominates by TVL with full-featured markets. Maker specializes in DAI stablecoin generation. Compound pioneered lending with conservative design. This guide covers TVL, rates, governance, collateral, and risks.
Quick Verdict
Aave: Largest TVL (~$9B), most features, best yield incentives, multi-chain.
Maker: Best for DAI stablecoin, most decentralized governance, strong tokenomics (MKR).
Compound: Conservative, simple, security-focused, lowest risk. Choose Aave for yield, Maker for DAI, Compound for safety.
1. Protocol Overview
Aave (2017, launched 2020): Largest DeFi lending protocol by TVL (~$9B). Full-featured: supports 30+ collateral types, flashloans, governance, safety module. AAVE token governance + safety staking (earn fees). Multi-chain (Ethereum, Arbitrum, Optimism, Polygon, Avalanche, BNB Chain).
We've tested all of these extensively. The differences matter less than you'd think for casual users, but they compound for power users.
Maker (2015, MakerDAO 2017): Focuses on DAI stablecoin generation. Users lock crypto collateral, mint DAI. ~$8B TVL (mostly collateral, not lending TVL). MKR token governance. Decentralized stability fees and liquidations. Less TVL than Aave but more focused (stablecoin not yields).
Compound (2018): Pioneered algorithmic lending. cToken model (deposit ETH, receive cETH earning yield). Conservative approach: 10+ collateral types, limited risk. COMP token governance. ~$3B TVL. Focus on core lending, not speculation.
2. Head-to-Head Comparison
| Metric | Aave | Maker | Compound |
|---|---|---|---|
| TVL | ~$9B | ~$8B | ~$3B |
| Type | Full lending market | Stablecoin generator | Lending + rates |
| Collateral Types | 30+ (ETH, stables, altcoins) | 15+ (locked for DAI) | 10+ (conservative) |
| Supply APY (ETH) | 2-4% + AAVE rewards | N/A (no ETH lending) | 2-3% |
| Borrow APY (USDC) | 4-6% | N/A (stablecoin output) | 4-5% |
| Risk Level | Medium-High (complex) | Low-Medium (conservative) | Low (simple) |
| Governance Token | AAVE | MKR | COMP |
3. Core Features & Mechanisms
Aave: Full-featured DeFi. Supply assets to earn yield. Borrow against collateral (must maintain LTV ratio). Flashloans (borrow up to $1B without collateral, must repay + 0.09% fee in same tx). Variable + stable rate options. Dynamic risk parameters per asset. Governance voting.
Maker: Stablecoin focused. Lock collateral (ETH, WBTC, stables, LSTs like stETH). Mint DAI at stability fee (~2-4% annual). Must maintain 150%+ collateralization ratio. Risk of liquidation if collateral drops. Secondary market: borrow/lend DAI on exchanges. No flashloans.
Compound: Pure lending. Supply token to earn yield (via cToken interest accumulation). Borrow against collateral. Administrative pause mechanism (for emergency). Transparent on-chain governance. No flashloans. Risk management via conservative LTV ratios.
4. DAI Stablecoin (Maker)
DAI is the primary product of Maker. User-generated stablecoin: lock collateral, mint DAI. Peg maintained by arbitrage + stability fee incentives (currently ~2-4% annual fee on DAI debt).
Strengths: Decentralized (no issuer), peg never broken (2019-2026 range: $0.99-1.01), 150%+ overcollateralized (safe), no risk of bank runs (smart contracts enforce rules).
Weaknesses: Complex to generate (need Ethereum knowledge + collateral), $1.2B TVL means liquidity concentrated, stability fee adds cost (vs USDC which is free).
5. Governance & Token Value
AAVE (Aave): Governance voting. Safety module staking: lock AAVE to earn 5-6% APY from protocol fees. Vote-escrow similar to Curve. Increasing utility over time.
MKR (Maker): Governance voting on stability fees, liquidation ratios, etc. Fee absorption: protocol burns MKR when collecting fees (deflationary, increases MKR scarcity). Strongest tokenomics among three (alignment with protocol success).
COMP (Compound): Pure governance voting. No direct fee sharing or staking rewards. Limited token value beyond voting rights. Weakest among three.
6. Frequently Asked Questions
Which is best for earning yield: Aave, Maker, or Compound?
Aave: Highest TVL (~$9B), best rates via supply/borrow incentives (AAVE token rewards). Compound: Lower TVL (~$3B), strong rates on ETH/USDC. For pure yield: Aave wins. For risk management: Compound (conservative).
What is the difference between these protocols?
Aave: Full-featured lending market. Supports 30+ collateral types. Flashloans. Maker: Focused on DAI stablecoin generation. Users lock collateral to mint DAI. Compound: Pure lending protocol. 10+ collateral types. Governance via COMP token.
Is DAI (Maker) a good stablecoin?
DAI: Decentralized stablecoin (user-generated, not issuer-backed). Peg maintained by arbitrage + stability fees. Robust: never broken $0.99-1.01 range (2019-2026). Overcollateralized (150%+), safer than USDC/USDT.
Which protocol is most secure?
All three audited, battle-tested. Compound: oldest (2018), conservative design, lower TVL means less attack surface. Aave: largest ($9B), most complex (more vectors). Maker: battle-tested ($8B TVL), decentralized governance (more resilient).
What are the risks of lending protocols?
Counterparty risk (protocol hacked—though none yet post-launch). Oracle risk (wrong price = liquidations). Liquidation cascades. Governance attacks. Mitigation: diversify across protocols, use conservative LTV ratios, monitor liquidation risks.
Which governance token has better value: AAVE, COMP, or MKR?
AAVE: Governance + safety module (earn 5-6% staking fees). COMP: Governance only (no income). MKR: Governance + fee absorption (burns excess revenue). MKR has strongest tokenomics (fee-driven deflation). AAVE strong (safety module rewards). COMP weakest (pure governance).
Methodology note: Our comparisons analyze on-chain data, fee structures, and feature sets as of the publication date. Market conditions change rapidly — always verify current rates before acting. Read our full methodology.