Aave Founder: The next step for DeFi is to provide financing for solar energy, robotics, and space.

Author: Stani.eth

Compiled by: Deep Tide TechFlow

Deep Tide Introduction: A quantitative investment paper written personally by the founder of Aave: he individually estimates capital expenditures in solar energy, data centers, robotics, nuclear energy, and space infrastructure, concluding that the real market size facing DeFi is $100-200T, which is 15 times the total assets under management of the top ten global banks. Whether this argument is valid is another matter, but the analytical framework itself is worth every RWA track enthusiast reading carefully.

Full text below:

I previously wrote that DeFi has improved the supply side of capital allocation problems. On-chain liquidity is highly liquid and can be programmatically transferred to higher risk-adjusted return opportunities. Aave has already demonstrated its ability to absorb hundreds of billions of dollars in liquidity, thanks to years of accumulated trust and its superior cost structure in crypto-backed lending models.

This liquidity creates enormous opportunities for emerging financial primitives and use cases. The next evolution of DeFi should focus on demand-side issues, rebalancing liquidity equilibrium.

I also previously wrote that just solar infrastructure alone could bring Aave a $30-50T opportunity. But this is far from the end; the future opportunities Aave can tap into exceed $200T.

The infrastructure that supports everything, providing financing for all

The foundation that keeps everything running is infrastructure. This layer ensures our electric vehicles have range, homes stay warm and lit, water flows normally, computers compute, and the world remains connected.

From a capital allocation perspective, infrastructure is seen as a safe choice. The world needs energy, water, computing power, and communication. Established infrastructure also bears technological risks that decrease over time and scale, gradually shifting from technical opportunities to financial ones as they mature.

While considered stable and safe, emerging infrastructure also offers higher-return, high-conviction allocation opportunities. Technologies at the early stages of cost curves carry richer risk premiums.

Properly structured infrastructure (correct types) is a high-quality financial product because it typically involves high capital expenditure needing financing and low operational expenditure—meaning operating costs are low enough for debt to be repaid over the asset’s lifecycle. In many respects, future-financed infrastructure is a cash-flow-generating hard asset.

Most importantly, when structured correctly, infrastructure finance follows Aave’s lending model—lending against the asset itself, not against user credit, similar to how Aave operates today.

How big is the opportunity?

I believe that critical infrastructure assets vital for the world’s transition to abundance include: solar farms, batteries, data centers and GPUs, electrified transportation, robotics, seawater desalination, mineral extraction, carbon capture, nuclear energy, and space infrastructure. If something isn’t on this list, it’s not due to a lack of confidence but to illustrate the broad scope of this category. As long as an asset qualifies as an “abundant asset” and isn’t declining into obsolescence, it’s likely a reasonable choice.

Solar and batteries: Solar alone represents $15-30T in capital expenditure needing financing. At this scale, solar will replace fossil fuels before 2050. I detailed this in my previous articles.

Data centers and GPUs: The cumulative capital expenditure for GPUs and data centers ranges from $15-35T, depending on AI adoption sensitivity. McKinsey estimates that by 2030, $6.7T in capital will be needed. My consistent logic is: more computing power means more calculations and more complex tasks. Moore’s Law has its limits, but we are entering atomic-level engineering and vertical layering of GPUs, and these advances won’t stop us from building more compute. Quantum computing, which could drive another wave of distributed computing expansion, is not yet factored in.

Robotics: Automation of human tasks will be a defining feature of our transitioning world. Robots, whether dedicated warehouse systems or humanoid robots for daily physical tasks, will replace human labor and give us more freedom. By 2050, robotics could require $8-35T in capital expenditure.

Electric vehicle infrastructure: Electrification of transportation (cars, rail, planes, drones, charging networks, ships, ports) is on the cusp of a large-scale transition from fossil-based to electric power systems. Estimated capital expenditure by 2050 is about $10-25T. Autonomous driving will ensure no vehicle remains idle; they will serve society around the clock.

Nuclear energy: I have a love-hate relationship with nuclear as a wealth asset. It’s a reliable choice for large-scale energy production. However, nuclear is deeply tied to policy, making innovation and financing difficult. Projects are often more expensive and longer than expected. Small modular reactors and better policy frameworks could change this. My conservative estimate for 2050 capital expenditure is $3-8T, constrained by policy.

Solar-powered seawater desalination: Desalination isn’t new; it’s been around for decades, with Middle Eastern countries heavily reliant on it. It remains costly, but with scale effects and solar development, near-free water could be available worldwide. Capital expenditure needed: $6-12T by 2050.

Carbon capture: Growth driven by government incentives. Estimated capital expenditure: $3-8T by 2050.

Key minerals: Copper, lithium, nickel, and rare earths driving electrification, robotics, and more. Estimated capital expenditure: $5-15T by 2050.

Digital networks: Fiber optics, communication towers, and ground stations. Estimated capital expenditure: $6-15T by 2050.

Space infrastructure: As a scale factor, space will see significant growth with transportation and launch scale effects. Space will be an infrastructure investment opportunity over the coming decades. Conservative estimate for 2050 capital expenditure is $2-6T, but this could multiply with higher launch cost reductions—by 10-50 times—potentially reaching $10-30T, or even $50T in extreme cases. This includes: satellite constellations ($3-8T), launch infrastructure ($1-3T), orbital infrastructure (fuel tugs, servicing stations, essentially orbital logistics hubs) ($2-7T), space-based solar ($2-10T), space manufacturing ($1-5T), and lunar infrastructure ($1-5T).

I’ve skipped hydrogen production because I’m uncertain how it will evolve within the broader electrification transition.

In total, infrastructure financing could present about $100-200T in opportunities for DeFi. As a reference, the top ten global banks manage about $13T in assets. Successfully financing most of this transition could make Aave the largest financial network to date.

Choosing the right form for Aave

Infrastructure financing in DeFi can mainly take two forms.

Path 1: Yield-bearing stablecoins (YBS)

YBS are becoming strong examples of off-chain income distributed to on-chain users. Ethena mainly achieves this through basis trading; USD.ai via GPU financing. Yield on staked sUSDai is around 10-15% annually.

From Aave’s perspective, growth in YBS directly translates to protocol growth. Aave is a circular machine: if the yield on YBS infrastructure products exceeds Aave’s cost of funds (about 4-5%), there’s a compounding opportunity—borrowing liquidity from Aave using YBS as collateral and redeploying it. I see YBS as an on-chain yield distribution wrapper, similar to traditional off-chain funds.

Path 2: Direct collateralization

Using tokenized infrastructure directly as collateral means that yields or economic benefits stay off-chain or with the borrower, but through collateral and borrowing demand, Aave receives stablecoin supply yields for depositors. This path isn’t aimed at maintaining stable net asset value, making it suitable for assets with volatile NAV that can’t be tested via stablecoins.

Which path will prevail? Hard to say. Both have advantages, and Aave supports both well. Examples of YBS include Ethena’s sUSDe and Maple’s SyrupUSDT. Examples of direct collateralization include Tether’s gold (xAUT), Bitcoin and Ethereum-backed loans, and JAAA RWA funds—where underlying economic returns go to asset owners, with Aave acting as an intermediary paying interest to on-chain depositors. Notably, Aave’s own aTokens (like aUSDC) are, in a sense, the earliest form of on-chain YBS in this use case.

The choice depends on user types. The former might appeal to on-chain allocators maximizing YBS yields; the latter to borrowers seeking to expand liquidity and build more infrastructure without directly targeting on-chain yield distribution—operators or funds aiming to scale.

Are yields sufficient?

While DeFi currently has excess capital in the prevailing interest rate environment, infrastructure financing should offer enough upside to transfer this capital. Average internal rates of return (IRR) across sectors: solar 10%, batteries 12%, data centers 13%, EV charging infrastructure 13%, water infrastructure 9%, space infrastructure about 18%. The higher the technical risk and the earlier the position on the cost curve, the higher the assumed returns.

Yields can be further enhanced through strategies. Vaults on top of Aave V4 can be configured into solar farms yielding 8-12%, using these as collateral to borrow GHO (creating high-yield profit space for Aave), then reinvesting GHO into battery farms with 12-18% yields, or GPU data center opportunities with 10-20% annualized returns.

DeFi users are typically sensitive to redemption risk and lock-up periods (this may change as the sector matures). Infrastructure products usually generate cash flow, helping mitigate redemption risk. Using Aave as a liquidity buffer makes these products more accessible—users can supply liquidity to specialized hubs focused on these economic features and trust assumptions, isolating and controlling risks while gaining access to infrastructure opportunities. The key difference is that tokenizing the assets themselves enables auction-based liquidation, improving liquidity features compared to slow-layered debt-encapsulation funds.

Aave as a financial infrastructure layer

The best way for Aave to enter RWA and infrastructure opportunities is as a foundational layer for financing liquidity, starting from the low-technical-risk, mature end (solar), then gradually moving toward higher-risk assets with the fine risk controls enabled by Aave V4’s hub-and-spoke architecture.

Today, most RWA tokenization focuses on assets with deep liquidity markets: treasuries, money market funds, corporate credit. These assets trade smoothly, and users have sufficient channels to borrow against them. Similarly, while private credit appears to be an attractive DeFi use case, it also has drawbacks. Private credit often involves CLOs, corporate, and private equity financing. If the infrastructure layer is the underlying, then this is the top layer. In a world transforming faster than ever, especially at the top, assets need to tilt toward the future we are building, not the past we are leaving behind. An asset-backed financial product that looks excellent on paper may lose its relevance in the world of tomorrow.

Tokenization of traditional financial assets will continue to grow and will undoubtedly be part of Aave’s story, just as native crypto assets and their growth persist. But the bigger opportunity lies in becoming the future infrastructure financing layer. That’s what excites me about RWA and Aave.

What does this mean for fintech companies?

Large fintech firms are increasingly becoming the distribution and experience layer: the interface that delivers quality financial products to end users. I previously wrote that DeFi can enable fintech companies to unlock leaner cost structures for new financial products. DeFi operates almost autonomously, more transparently, and enforces execution via smart contracts. It requires less operational overhead, enabling higher profit margins and opening new financial opportunities.

In a world where financial access is commoditized and no longer offers differentiated value propositions, the ability to access unique yield opportunities creates new value for fintech companies (and banks) and their users. Fintech companies actively participating in stablecoin issuance also open new use cases and real lending demand for stablecoins collateralized by infrastructure.

Through Aave Kit and Aave App, fintech companies and banks can become perfect distribution channels for the yields generated by infrastructure collateral on Aave V4, which are closely tied to the future we are building. Connecting Aave with fintech firms and banks to inject capital could accelerate the transition to abundance by 10-15 years. This presents a unique opportunity for Aave and its partners to capture and share a $200T market value.