Yesterday, DeFi lending protocol Aave Arc went live, enabling permissioned DeFi pools where participants have been through AML and KYC procedures with digital asset custodian Fireblocks acting as the whitelister. The topic was first broached last July.
Fireblocks – fresh off a $400 million December funding – shared names of some of the 30 institutions, and no banks were amongst those disclosed. All the participants mentioned are well known in the cryptocurrency sector. We’ve asked whether there are any un-named banks in the group but didn’t receive a response in time for publication. We’re aware of a few interested banks.
For those unfamiliar with Aave, the permissionless version allows users to deposit and earn interest on stablecoins or cryptocurrencies such as wrapped Bitcoin or Ether. There is currently almost $25 billion deposited. Typically a borrower will provide a cryptocurrency as collateral and then borrow stablecoins against it for up to 85% of the cryptocurrency’s value. This happens without intermediaries. It’s possible to earn 3% interest on USDC stablecoin deposits.
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