The Aave Protocol, an open-source, decentralized and non-custodial liquidity protocol that was launched in January 2020, has seen a huge surge in growth; its peak liquidity has exceeded 30 billion USD and it has around one million active users.
Demand for DeFi has caused traditional finance entities such as fintechs, hedge funds, family offices, and asset managers to show an increased interest in utilizing a form of the Aave Protocol that meets their internal stipulations.
Furthermore, a wide range of financial organizations including major investment banks, endowments, mutual funds, pension funds and central banks have sought to understand the Aave Protocol and DeFi in general.
Aave Arc provides a secure marketplace and a testing ground for institutions to witness the benefits of DeFi: transparency, decentralization, fast progress, automated processes based on smart contracts, liquidity and customizable features.
KYC(Know Your Customer) and Decentralization
Traditional banking systems and fintech services can make DeFi available to many people who have not yet used crypto wallets due to factors such as complexity and access.
Aave Arc introduces the concept of “whitelisters” for permissioning, which provide users of the permissioned Aave market with KYC, AML, and Onboarding services. To find out more information about whitelisters, please refer to the Arc Whitepaper here.
Aave Arc adheres to the decentralized philosophy that is foundational to DeFi and is managed by Aave Governance in the same manner as Aave V2.
The Aave Arc whitelisters serve as a protective force in the Aave Arc market, being able to use multisig to reject proposals from the Aave Governance if those proposals impede their capacity to uphold compliance regulations. This is essential for preserving the longevity of Arc, as well as providing a method of monitoring those whitelisters who are selected or ousted by governance.
Fireblocks
Today we are delighted to share that Fireblocks LLC, an MSB with money transmission permits in multiple states of the US, has made a submission for Aave Improvement Proposal (AIP) to become the initial whitelister on Aave Arc (the Fireblocks AIP). Fireblocks is distinguished for its cutting-edge institutional MPC wallet product which already backs some DeFi protocols, including Aave V2. To date, it has managed $1.4TN of crypto transactions.
If Aave Governance gives the green light to this AIP, the first authorized version of the Aave Protocol will be known as Aave Arc. Individuals taking part in Aave Arc will have access to both supplying cryptoassets for yield and borrowing assets that are secured by collateral. The same features available on the tried-and-true permissionless market of Aave will also be accessible on its authorized counterpart, Aave Arc.
At the start, Aave Arc will offer Ethereum, USDC, Bitcoin, and AAVE as its available assets. The Aave Governance body can authorize additional assets through the regular proposal process.
Access
Subject to governance approval of the Fireblocks AIP, market participants will be able to onboard onto Aave Arc via Fireblocks LLC and use Aave Arc in the same way as they use Aave V2.
It is expected that regulated entities may submit governance proposals in the future to be accepted as whitelisters for Aave Arc, enabling market participants to choose to join Aave Arc via one or more whitelister.
Summary
Aave Arc is providing a connection for traditional financial institutions to interact with DeFi, enabling them to offer fresh products and services to their customers. If you are keen on taking part in the Arc Market, you can express your interest here: https://info.fireblocks.com/pd-beta
