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Aave, the decentralized lending platform, launched a permissioned lending and liquidity service called Aave Arc to assist institutions in taking part in regulation-compliant decentralized finance, CoinTelegraph reported. Aave Arc was created to help maintain compliance. The permissioned liquidity pool is not like Aave’s permissionless cross-chain counterparts.
30 entities line up for whitelist
Of the 30 entities to sign up for the whitelist for Aave Arc, institutional digital asset custodian Fireblocks was the first. Yesterday, they announced that the pool made it possible for whitelisted institutions to take part in DeFi safely as liquidity providers and borrowers.
Fireblocks is also Aave Arc’s whitelisting agent, making sure that other entities which want to join the permission pool fulfill KYC/AML requirements. As it is not a regulated establishment, Aave cannot perform this task.
Anubi Digital and Celsius among whitelisted entities
Fireblocks has already approved “30 licensed financial institutions to participate on Aave Arc as suppliers, borrowers, and liquidators.” Anubi Digital, GSR, CoinShares, crypto yield aggregator Celsius, and Canvas Digital are among them.
TVL of DeFi is $133B
Aave’s new offering intends to onboard more institutions to DeFi, the total value locked (TVL) of which is $133 billion. Data of DappRadar show its TVL has grown 4.5 times since January 10 of last year.
Regulatory uncertainly and compliance issues prevented institutions from entering the DeFi space last year although they started to buy cryptocurrency in increasingly sizable portions.
About Aave
The decentralized finance protocol allows lenders to earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a flash loan using this liquidity.
AAVE provides holders with discounted fees on the platform, and it also serves as a governance token — giving owners a say in the future development of the protocol.
The project allows people to borrow and lend in about 20 cryptocurrencies, meaning that users have a greater amount of choice. One of Aave’s flagship products are “flash loans,” which have been billed as the first uncollateralized loan option in the DeFi space. There’s a catch: they must be paid back within the same transaction.
Those who borrow through Aave can alternate between fixed and variable interest rates. While fixed rates can provide some certainty about costs during times of volatility in the crypto markets, variable rates can come in handy if the borrower thinks that prices will fall in the near future.
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