Author: Shenchao TechFlow
DeepChain Summary: You hold shares in NVIDIA and Apple and don’t want to sell them, but you’d like to extract USDC to trade cryptocurrencies on-chain or earn interest—and maybe even claim official subsidies? This strategy, once only theoretical, has now been fully realized on the Base chain.
On October 14, as Base officially launched Earn & Borrow and integrated with Aave, combined with the newly approved USDC incentives for U.S. stock collateral by the Aave DAO, this experiment in “on-chain Wall Street” has been directly placed in front of retail investors. For AAVE, which has risen nearly 30% against the market trend over the past month, is this move merely a short-term hype or the beginning of a new valuation reset?
Over the past month, while the broader crypto market experienced volatility and a prolonged downturn, the established lending leader AAVE forged an independent trajectory: its token price remained above $160, recording nearly a 30% gain over the last 30 days.
The continued focus on AAVE at this time, beyond expectations around the V4 architecture upgrade and solid fundamental revenue, may also be driven by a key catalyst: the recent concentrated deployment on the Base chain of a dual strategy combining "US stock collateralized lending" with significant channel expansion.
First, let’s look at today’s (October 14) most prominent news:
Base officially launched a new service called Earn & Borrow, and Aave immediately announced itself as the underlying core protocol.
Although the official Base press release uses developer-oriented terms like “end-to-end financial stack,” its business logic is actually very straightforward:
Base has essentially created a "one-click integration" plugin that allows various third-party wallets, consumer apps, and even traditional financial platforms to directly embed Aave’s earning and lending pools into their own interfaces.
As one industry professional commented in the official post’s comments: “The next person to borrow on-chain may never open a DeFi website.”
For investors familiar with the Base ecosystem, this represents a significant shift in the landscape. Over the past year, nearly all on-chain lending traffic within the Coinbase ecosystem was exclusively captured by Morpho; now, with Base launching its official lending infrastructure, Aave has reentered the core lineup, standing shoulder to shoulder with Morpho to jointly capture Base’s on-chain lending market, which has already surpassed $3 billion.
If integrating Base Earn & Borrow addresses the traffic entry question of “where to find new users,” then another resolution implemented by Aave the previous day (October 13) directly answers the question of “what to use to attract capital”:
Subsidize on-chain U.S. stock collateralization.
At the end of last month, Aave V4 launched a dedicated "Equities Hub" on Base, allowing users to use seven tokenized equities issued by Coinbase—including NVIDIA NVDAc, Apple AAPLc, and Tesla TSLAc—as collateral to borrow USDC.
On October 13, the Aave DAO officially approved distributing USDC cash incentives to these US stock-collateralized positions via Merkl.
This means that, while Base officially stepped in to help establish front-end channels, Aave itself transformed the world’s largest asset pool (U.S. equities) into interest-bearing and leveragable assets on the back end.
On one hand, the expansion of traffic entry points; on the other, the breakout of underlying assets. Recent business developments have prompted the market to reassess AAVE’s valuation ceiling.
Stake NVIDIA in AAVE and borrow USDC?
Returning to practical implementation, how exactly can ordinary users participate? And how should one calculate the accounting for “depositing U.S. stocks, borrowing U.S. dollars, and receiving subsidies”?
The core of the entire gameplay lies in the isolated market “Equities Hub” specifically launched by Aave V4 on the Base chain.
First, let’s examine the quality of the underlying assets. Currently, this platform supports seven tokenized U.S. stocks, all of which are leading tech giants with the highest liquidity and largest retail investor holdings, each marked with a uniform “c” suffix: Microsoft (MSFTc), Apple (AAPLc), Google (GOOGLc), Amazon (AMZNc), NVIDIA (NVDAc), Meta (METAc), and Tesla (TSLAc).
These tokens are not synthetic assets without underlying support, but rather certificate-style structured tokens issued by Coinbase to non-U.S. eligible users, with the underlying real stocks held 1:1 in segregated accounts by regulated brokers such as Alpaca Securities.
Notably, these tokens feature a "total return" design, where dividends paid by U.S. stocks are automatically reinvested and reflected in your holdings through token multipliers.
Once qualified users receive these tokenized stocks on the Base chain, they can directly deposit them into Aave’s Equities Hub as collateral to borrow USDC.
However, to mitigate cross-market risks, Aave has maintained considerable restraint in its parameter design—for example, relatively stable stocks like Microsoft (MSFTc) and Apple (AAPLc) have been granted the highest leverage levels, with loan-to-value ratios of 79% and 78% respectively;
Google (GOOGLc) and Amazon (AMZNc) follow closely at 76% and 73% respectively; the higher-volatility NVIDIA (NVDAc) is set at 70%, while Tesla (TSLAc) and Meta (METAc) are lowered to 65%.
In addition, you can only deposit USDC as collateral for stock lending; you cannot directly short and borrow someone else’s NVIDIA stock from the pool, nor can you use one stock to borrow another. Meanwhile, the initial market capacity is set at approximately $29 million in collateral and $21 million in borrowing limits, fully isolated from the Aave main pool.
What has made this mechanism particularly attractive for arbitrage over the past two days is the Merkl incentive program that took effect on October 13.
Before incentives, on-chain staking of U.S. stocks to borrow USDC merely eliminated the cumbersome account verification process of traditional brokers, but the cost of capital was not significantly low. Now, with Aave DAO approving the budget, users can simply deposit the above seven U.S. stock tokens into supply positions to directly claim USDC rewards distributed proportionally via Merkl.
Based on current community-calculated on-chain data, the annual percentage rate (APR) for this USDC supply-side incentive is approximately in the 3% range, while the interest rate cap for USDC lent out within the pool is also maintained at a low level of around 3%.
This creates a highly attractive capital loop:
If you are already a long-term holder of NVIDIA or Apple, tokenizing these stocks and depositing them into Aave not only preserves your exposure to U.S. stock market gains and dividend income but also lets you earn an additional ~3% in USDC deposit rewards;
If you further lend out 70% of your USDC to participate in new token launches, yield farming, or allocate to other interest-bearing assets, the deposit subsidy you receive will exactly offset the interest cost of lending out the USDC—effectively achieving an "interest-free or even negative-rate" on-chain stock collateral loan.
This is why Aave founder Stani Kulechov mentioned, when evaluating this mechanism:
Previously, tokenized stocks could only be held or traded, but now they have truly become assets that can generate liquidity.
Small pool, big narrative
Currently, the practice of using U.S. stocks as collateral for AAVE loans involves only a few million dollars in U.S. stock collateral.
If we consider only protocol revenue, this $5 million stock collateral pool, even if fully lent out, would generate negligible interest income for Aave DAO, nowhere near the hundreds of billions of dollars in native crypto assets in Aave V3.
But the crypto market is more driven by narratives and imagination.
For a long time, Aave’s valuation ceiling has been tightly locked within the realm of “crypto存量 leverage”; it only thrives during bull markets when retail users enthusiastically stake ETH and WBTC to borrow and trade cryptocurrencies. Once a bear market sets in and borrowing demand shrinks, protocol revenue plummets sharply.
And today, two events on Base changed Aave’s narrative script:
On the asset side, Aave V4 demonstrates through its “hub-and-spoke” isolated architecture that it can transform the world’s largest asset pool and public equity (U.S. stocks) into interest-bearing, leveragable productive assets without compromising the security of the main pool;
On the channel side, by embedding Base Earn & Borrow, Aave has turned its liquidity pool into the default financial backend for third-party consumer apps.
Thus, when Coinbase converts U.S. equities into compliant on-chain tokens, Base turns lending into invisible API plugins, and Aave provides underlying liquidity pricing and liquidation, these three together create a closed loop that bypasses traditional Wall Street brokers.
In terms of narrative, the most profitable and highest-barrier business of traditional brokerages—stock margin lending—is being decomposed into open-source code on-chain.