Stani Kulechov – The founder of Aave hinted at a “private pool for institutions that still practice before breaking into DeFi” on May 12 and then announced Aave Pro on May 18. What is he doing ? It allows institutions and the corporate world to access DeFi-grade returns on the main Ethereum-based loan / borrowing. Aave protocol – however, this would be a specially curated version and would only allow access once “certain requirements” have been met.
Aave Pro, like other institutional-flavored DeFi versions of existing products on the rise, allows privileged authorized access to customers, who might not otherwise be able to access the DeFi world due to regulatory and compliance concerns. It is expected to launch this month.
A recap email revealed on Twitter by @TraderNoah offers more insight into this exciting new product. Aave Pro was discussed in more detail at the recent Blockworks “Next Steps In Institutional DeFi” seminar and attendees received an email reminding them of what had been discussed. According to the email, Aave Pro will have the following characteristics.
It will feature Aave v2 smart contracts, secured, tested and audited extensively. The most important part is that access would require whitelisting via Know Your Customer (KYC) completion. When it launches, it will feature liquidity pools comprised only of Bitcoin, Ethereum, USDC, and Aave itself.
This whole flavored version of DeFi will exist outside of the public version of Aave. Aave Pro will be assisted by Fireblocks for money laundering and fraud protection. It will always be governed by the governance of the Aave, will contribute to the treasury and will benefit the ecosystem.
There is community disagreement over designing allowed KYC versions of DeFi protocols – as they go against the core ethics of decentralized finance (DeFi), but it is likely to turn into a bridge. between TradeFi and DeFi, shifting value and normalizing the use of the revolutionary new financial system by the traditional one.
What is Aave and Aave Pro
Aave is a decentralized lending and borrowing protocol. It is open source and non-depository. Lenders provide assets to earn compound interest and obtain a-marked tokens, the value of which continually increases in value to account for the added interest. On the other hand, borrowers can obtain loans by providing assets, with the parameters of collateral ratio, liquidation threshold and liquidation penalty.
Interest rates change automatically based on supply / demand and withdrawals can be made at any time. Aave Pro, works in the same way, but allows privileged access to pools specially organized for institutional clients and the corporate world. It enables the inclusion of TradeFi in the DeFi world and is a likely conduit for an interconnected world, where money flows freely between the two versions of finance.