Today, the launch of the permissioned version of the popular DeFi liquidity protocol, Aave Arc, was announced. Aave Arc provides a separate deployment of the Aave V2 liquidity pool for institutions that allows “whitelisted” institutions to participate as suppliers of liquidity to earn yield, as well as borrowers of crypto assets. 

With approximately $255.9 billion total value locked in DeFi, the market has largely remained untapped by institutions due to focus on risk management and KYC/AML requirements. According to blockchain research firm, Blockdata, enabling institutional access to DeFi could unlock a trillion dollar opportunity over the next half decade. 

Customers of Fireblocks who volunteer to become “whitelisted” by undergoing a rigorous customer identification process can now securely access DeFi via Aave Arc with all of the security of Fireblocks’ MPC-level controls, policies and workflows. 

“From hedge funds to banks, regulated DeFi tooling could unleash a wave of new products and services such as flash-loans and high-yield deposit accounts,” said Michael Shaulov, CEO of Fireblocks. “Together with Aave Arc, our technologies can supercharge financial innovation around the world and exponentially grow the size of the market overnight.” 

The framework Fireblocks has chosen to employ references globally accepted KYC/CDD/EDD principles, in accordance with FATF guidelines and certain member country implementation, to identify and verify the identity and beneficial ownership of legal entity customers and monitor the Aave Arc pool and its participants on an ongoing basis. Fireblocks’ approach has been approved by Aave protocol governance and all future “whitelister” institutions, if approved by Aave protocol governance, will have to meet or exceed these standards.  

“DeFi represents a powerful wave of financial innovation including transparency, liquidity, and programmability–and it’s been inaccessible to traditional financial institutions for far too long,” said Stani Kulechov, Founder & CEO of Aave. “The launch of Aave Arc allows these institutions to participate in DeFi in a compliant way for the very first time.”

At launch, Fireblocks has approved 30 licensed financial institutions to participate on Aave Arc as suppliers, borrowers, and liquidators. Among the institutions are Anubi Capital, Bluefire Capital (acquired by Galaxy Digital), Canvas Digital, Celsius, CoinShares, GSR, Hidden Road, Ribbit Capital, Covario, Wintermute, and Alphemy Capital.

“The launch of Aave Arc is a pivotal moment in DeFi,” said Rich Rosenblum, Co-Founder and President, GSR. “As a result of Fireblocks making institutional access to DeFi pools possible, companies like ours are able to create new products for our customers. We are excited to be among the first institutions to be whitelisted.”

With $26 billion total value locked in Aave’s decentralized non-custodial liquidity market protocol across its deployments on Ethereum, Avalanche and Polygon, it is widely regarded as one of the most secure and most used DeFi protocols with 100+ integrated onramps. 

New participants can sign up here.

About Fireblocks

Fireblocks is an easy-to-use platform to create new blockchain based products, and manage day-to-day digital asset operations. Exchanges, banks, PSPs, lending desks, custodians, trading desks, and hedge funds can securely scale their digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves thousands of organizations in the financial, payments, and web3 space, has secured the transfer of over $4 trillion in digital assets and has a unique insurance policy that covers assets in storage & transit. Find out why CISOs and Ops Teams love.

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