Yesterday marked the launch of Aave Arc, a permissioned version of Aave, one of the most popular borrowing/lending protocols in the crypto space. The launch brings 30 institutions into the DeFi space, such as CoinShares, Celsius, and Wintermute.
Each Aave Arc participant must be “whitelisted” by Fireblocks, a New York-based crypto custodian, which will require entities to undergo rigorous customer identification processes. Fireblocks was approved by the community in November and is the only entity that can whitelist new entities for entry into Aave Arc. (SEBA, a Swiss Bank, recently proposed itself for a whitelist role via Aave’s governance forum, though no vote has taken place as of yet.) Fireblocks will be implementing know-your-customer procedures in accordance with FATF guidelines.
“From hedge funds to banks, regulated DeFi tooling could unleash a wave of new products and services such as flash-loans and high-yield deposit accounts,” said Michael Shaulov, CEO of Fireblocks. “Together with Aave Arc, our technologies can supercharge financial innovation around the world and exponentially grow the size of the market overnight.”
The new platform will use a separate deployment of Aave v2 that will restrict access to only whitelisted entities. In essence, Aave Arc allows institutional players to join the crypto fray, where yields range from .01%-8.66% APY on digital asset deposits – a far cry from the yield found in the traditional world.
“DeFi represents a powerful wave of financial innovation including transparency, liquidity, and programmability–and it’s been inaccessible to traditional financial institutions for far too long,” said Stani Kulechov, Founder & CEO of Aave. “The launch of Aave Arc allows these institutions to participate in DeFi in a compliant way for the very first time.”
The launch of Aave Arc comes roughly six months after it was first announced by Kulechov. Aave Arc is not the first major rebrand of a DeFi protocol for institutions. Compound, the tenth-largest DeFi protocol by total value locked, launched an institutional company in June of 2021, dubbed Compound Treasury, allowing neobanks and fintech firms to earn approximately 4% on USDC deposits.
Source: https://unchainedpodcast.com/permissioned-defi-is-here/
