With over $16 billion in cryptocurrency assets locked up, Aave is the largest DeFi lending enterprise. It plans to offer Aave Pro to a decentralized pool of safe-listed customers who have completed KYC criteria.
One of the biggest roadblocks to licensed financial institutions becoming involved in decentralized financing has been lifted.
The protocol is built on the Ethereum blockchain, allowing smart contracts to manage assets across a decentralized system.
Before borrowing funds in another crypto asset, borrowers would have to submit collateral. However, users can acquire exposure to various cryptocurrencies without needing to possess them through this approach.
Large companies and financial clients will use DeFi while remaining compliant with laws thanks to Aave Pro. Because it intends to follow strict rules catering to institutions, the proposed framework will require completing a Know Your Customer (KYC) process.
The DeFi business has collaborated with digital asset custody provider Fireblocks for the necessary KYC procedure to enroll new clients.
Following the webinar “Next Steps in Institutional DeFi,” which featured Aave CEO Stani Kulechov and Fireblocks CEO Michael Shaulov, attendees received emails about the new solution.
However, Novogratz is apprehensive about regulatory interest in the industry and if it will make it difficult for Aave to choose between permissionless and permissioned operations.
He said, “Will companies like Aave have to declare that they are no longer going to be as open and permissionless as they once were? “No matter how it comes in, we’re going to have some KYC to allow the regulators to continue to allow them to exist.”