Sarah Tran
Independent Analyst
- Popular DeFi lending platform Aave is launching a new protocol for institutional investors.
- Citing an increase in demand from professional investors in the industry, Aave Pro will be launched in July.
- The lending platform stated that there are plans to decentralize the governance of Aave Pro on the roadmap.
Aave will be launching private pools that will enable institutions to have access to decentralized markets in July.
Institutional demand for DeFi on the rise
Aave is a decentralized lending platform that allows users to borrow, lend and earn interest on cryptocurrencies without the requirement of a third party. The protocol runs on the Ethereum blockchain, which allows for smart contracts to be used for a distributed network to manage the assets on the network.
Borrowers would need to post collateral before they can borrow funds in another crypto asset. The process allows users to gain exposure to other digital currencies without having to own them.
One of the largest decentralized finance (DeFi) lending protocols, Aave is expected to launch a permissioned liquidity protocol for institutional clients later this month, given the recent rise in demand.
The launch of the private pools will allow professional investors to access DeFi through the new protocol called Aave Pro.
Currently, Aave is the largest decentralized lending protocol on the Ethereum network with over $10 billion in total value locked, according to DeFi Pulse.
Aave Pro will allow large corporations and financial clients to access DeFi while being able to comply with regulations. The new protocol will require the completion of a Know Your Customer (KYC) process, as it aims to follow strict regulations catering to institutions.
For the essential KYC process required for Aave Pro, the DeFi firm has partnered with digital asset custody firm Fireblocks to onboard new clients.
Following the “Next Steps in Institutional DeFi” webinar that featured Aave CEO Stani Kulechov and Fireblocks CEO Michael Shaulov, emails have been sent to attendees regarding the new product.
According to the email, Aave Pro will support four assets: Bitcoin, Ether, Aave and USD Coin. The message revealed that the new institutional product was initiated given the increase in demand from “various institutions.”
The protocol aimed at corporations will provide the same kinds of services as Aave’s current platform but will be kept separately from the main pools.
Additionally, the permissioned liquidity protocol will add a whitelisting layer onto the network’s existing V2 smart contracts to make sure that only “institutions, corporates and fintechs” that have been given the green light by Fireblocks’ KYC verification process would have access to the platform.
Aave further stated that there are plans in the future for further decentralization of the governance of Aave Pro.
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