Today, the Federal Reserve cut interest rates by 25 basis points. In my view, this increases arbitrage opportunities for Aave's interest rates.
For the past five years, Aave has consistently outperformed US Treasury rates, providing a reliable and uncorrelated yield.
My prediction is that the interest rate environment in TradFi will decline over the next two years or even longer as the Fed faces increased pressure to cut rates to mitigate the risk of an economic slowdown. Since all TradFi rates track the Fed's rate, this will compress all interest rates in TradFi.
This makes Aave an extremely attractive benchmark yield for DeFi and will serve as a catalyst for fintech companies to integrate Aave.