Stani Kulechov – Aave founder hinted at a “private pool for institutions that are still practicing before aping into DeFi” on May 12 and later announced Aave Pro on May 18. What does it do? It allows institutions and the corporate world to access DeFi grade yields on the leading lending/borrowing Ethereum based Aave protocol – however it would be a specially curated version and will allow access, only once “certain requirements” have been met.
Aave and Aave Pro
Aave Pro, like other institutional flavored DeFi versions of existing products on the rise, allows privileged permissioned access to clients, who wouldn’t be able to access the DeFi world otherwise, because of regulatory and compliance issues. It’s likely to launch in this month.
A recap email revealed over Twitter by @TraderNoah offers more perspective on this interesting new product. In the recent Blockworks seminar “Next Steps In Institutional DeFi”, they talked about Aave Pro further. The attendees received emails as a reminder of what they talked about. According to the email, Aave Pro will have the following characteristics.
It will feature Aave v2 smart contracts, testing security and auditing extensively. The most prominent part is that access would require whitelisting through Know Your Customer (KYC) completion. On it’s launch, it will feature liquidity pools of only Bitcoin, Ethereum, USDC and Aave itself.
This whole version of flavored DeFi will exist outside the Aave’s public version. Aave Pro will get assistance from Fireblocks for money laundering and fraud protection. Aave governance will still govern it , contribute to the treasury and benefit the ecosystem.
There’s community disagreement over designing permissioned KYC versions of DeFi protocols. This is because they go against the decentralized finance (DeFi) central ethos. It’s likely to turn into a bridge between TradeFi and DeFi, moving value across and normalizing usage of the new revolutionary finance system by the traditional one.
What’s Aave And Aave Pro
Aave is a decentralized lending and borrowing protocol. It is open source and non-custodial. The lenders supply assets to earn compounding interest and get a-marked tokens. This continuously increases in value to account for the added interest. On the other side, the borrowers can obtain loans by supplying assets. Options are with the collateralization ratio, liquidation threshold and liquidation penalty parameters.
The interest rates automatically change based on supply / demand and the withdrawals can be made at any time. Aave Pro, operates in the same manner, however allows privileged access to specially curated pools for institutional clients and the corporate world. It allows for TradeFi inclusion in the DeFi world and is a likely conduit for an interconnected world, where money flows freely between both versions of finance.