Differences between Maker and AAVE Multiply Positions.

Many things are equal in both Multiple positions, and some slight differences. One of the significant differences between are Oracles:

  • Maker has a 1-hour delay between oracle updates. This means that a position only becomes uncollateralized with a one-hour delay, allowing you more time to unwind your position. In your Vault view, you can see the next Oracle price in Oasis UI. Maker uses its own oracle network to report prices, while AAVE utilizes Chainlink services. For AAVE, liquidations are instantaneous, but this allows the protocol to have a lower penalty fee for liquidation. The liquidation penalty for each asset can be seen in the liquidation price tooltip.


  • The second significant difference between Maker and AAVE is the fee paid to borrow. On Maker, it’s called Stability Fee, and even if by definition it is variable, the governance can change it; it’s fixed between each voting round. On AAVE, the interest paid is known as Borrow APY, can be Variable or Fixed. In this case, the variable fee for USDC is used to borrow the desired amount to multiply your position. The Borrow Fee depends on the utilization rate of the pool; this means its value can change several times throughout the day without any notice since it updates on every change that happens in the AAVE lending pool.


  • Since your collateral is also available for borrowing in AAVE you will get paid a Supply APY. This extra yield you get in AAVE is considered for your positions. This is shown as the Net Borrowing Cost in Multiply. It takes the Supply APY for your total collateral and subtracts it from the Borrow APY. If the Net borrow cost is negative, you are earning more on your collateral than what you paid in the borrowed amount.

  • AAVE supports higher multiples and pays interest on the collateral deposited since it works with a single pool for lending and borrowing. This means that in cases where the protocol fails to properly deal with defaulting accounts and is left with bad debt, the remaining losses are spread, impacting all protocol users. AAVE uses a security module backed by staked AAVE and the profit it generates from the whole protocol to backstop such risk, plus active governance maintains supported tokens within correct parameters to avoid defaulting accounts. This risk is part of AAVE design, and it could happen in cases where AAVE governance fails to properly set the parameters for all or some tokens supported. 


  • The relationship between debt and collateral in Maker is expressed with the collateralization ratio defined as: how much more collateral you are providing compared to your debt. A collateralization ratio of 200% means you are providing 2 times more collateral than debt, and the minimum collateralization ratio represents the lowest amount of collateral you can provide before being liquidated. In the case of AAVE this relationship is known as Loan to Value. The LTV ratio represents the amount of debt borrowed in relation to the collateral provided. For example, a Loan to value of 50% means that for each unit of collateral you have borrowed half a unit of debt. The maximum Loan To Value represents the maximum amount of debt that can be borrowed against the provided collateral. Above the maximum LTV the Liquidation Threshold represents the LTV at which the account is eligible for liquidation. 


  • AAVE gives you aTokens that represent both the deposit and the debt, in some cases this might imply some different tax treatment when using each protocol. Check with your tax advisor to make sure this difference doesn't impact your positions.

These are the most relevant differences between Maker and AAVE multiply positions. For any other doubts, please join our Discord or watch the tutorials on our Knowledge Base and Youtube channel.