Intro
Aave has just brought its institutional product to life. Name Aave Arc, it is offering up to 30 investment firms in partnership with Fireblocks. Aave is currently the DeFi project with the largest lending protocol in cryptocurrency.
Aave Arc is aime at corporates and financial institutions to provide them with the means to borrow digital assets. And capture the high yields DeFi offers within a sandboxed regulatory environment. The liquidity pools in Aave Arc are permissione. Which in simple terms means that the institutions looking to use the service must be whiteliste. This is where Fireblocks comes in and is responsible for completing the necessary checks to onboard. Each firm by following KYC/CDD/EDD principles and the Financial Action Task Force’s guidelines.
Aave Arc will initially be open to 30 whitelisted institutions, including Anubi Digital, Bluefire Capital. Canvas Digital, Celsius, CoinShares, GSR, Hidden Road, Ribbit Capital, and Covario QCP Capital, and Wintermute.
The CEO of Fireblocks, Michael Shaulov, commented on the partnership, noting that “regulated DeFi tooling could unleash a wave of new products and services such as flash-loans and high-yield deposit accounts.”
Aave Launches Permissioned DeFi Pools for Institutions
Since its launch on Ethereum Why has Crypto become so trendy for digital investment?, Aave has seen huge success, attracting over $26 billion in total value locked or TVL. Last Year, it expanded to Polygon and Avalanche amid rising demand for DeFi on lower-cost alternatives to Ethereum. Aave Arc will give institutions access to its popular borrowing and lending services, but it will be segregated from its retail markets.
The new product has been in development since the second quarter of 2021. In a press release, Aave founder and CEO StaniKulechov said that DeFi had been “inaccessible to traditional financial institutions for far too long,” and that the rollout would help them “participate in DeFi in a compliant way for the very first time.”
Institutional interest in crypto soared in 2021 as the space saw rapid growth. After the likes of MicroStrategy made corporate investments in Bitcoin, major banks such as JPMorgan and Morgan Stanley announced plans to offer Bitcoin products for wealthy clients. While Ethereum has also attracted the attention of some larger players, institutions have largely DeFi has largely remained on the sidelines of DeFi. However, products like Aave Arc could soon change that.
Finally
MeltemDemirors, Chief Strategy Officer at CoinShares, described institutional participation in DeFi as “inevitable,” adding that CoinShares was “excited to support Aave Arc to unblock the next wave of institutional capital by bringing safer, more convenient access to new market structure.”
Aave is not the only DeFi lending protocol that’s aiming to cater to growing institutional demand. In June, Compound unveiled a similar institutional product called Treasury that offers investors high-yield interest on USDC stablecoin markets. As more DeFi projects look to roll out new offerings catering to the institutional market, an increasing number of major players will likely enter the space as it grows.
