Aave Introduces Permissioned DeFi Liquidity Pool

The DeFi platform, Aave announced the launch of Aave Arc, the company’s permissioned DeFi liquidity pool service for financial organizations, today. The newly introduced service has been designed to be compliant with anti-money laundering (AML) regulations.

Moreover, participating financial institutions will be required to undergo KYC verification. The permissioned DeFi liquidity pool service is now live with Fireblocks as the very first active whitelister for the protocol.

In a recent announcement, Fireblocks highlighted the growing popularity of the decentralized finance market and outlined the need for comprehensive KYC/AML regulations. Users of Fireblocks who volunteer to become whitelisted by undergoing a KYC process can access Aave while benefiting from Fireblocks’ security.

“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. The launch of Aave Arc allows these institutions to participate in DeFi in a compliant way for the very first time,” Stani Kulechov, the Founder and CEO of Aave, said.

DeFi Market

The DeFi market witnessed significant growth in 2021. With over $250 billion locked under Decentralized Finance, the sector has attracted substantial institutional investment in the last few months. Fireblocks outlined the growth opportunities in the DeFi sector and mentioned that institutional participation will cement the position of DeFi in the global financial industry.

“According to blockchain research firm Blockdata, enabling institutional access to DeFi could unlock a trillion-dollar opportunity over the next half-decade. Aave Arc looks to usher in this paradigm shift by unlocking secure and compliant DeFi access for financial institutions across the globe. In general, permissioned protocols like Aave Arc can offer the decentralization benefits of DeFi, while allowing only permissioning (whitelisting) to be more centralized for KYC/AML purposes,” Fireblocks noted.

With a market cap of more than $3 billion, AAVE is one of the most popular DeFi projects.