Aave Hints at New Institutional Product

Aave is hinting at a new product for allowing institutions to practice DeFi.

On Monday, Aave founder Stani Kulechov tweeted the words “Aave Pro for institutions” alongside a cryptic screenshot. According to Aave full-stack blockchain developer Emilio Frangella, the screenshot depicts the “technical implementation of an experimental version of the Aave protocol for institutions.” He also noted that a whitepaper would be released in the future detailing who is involved and how it will work.

On Twitter, Kulechov clarified that Aave DAO would collect reserve factor (a portion of interest set aside for liquidity) from Aave Pro and distribute it to the DAO treasury, thus rewarding open market AAVE stakers. But Kulechov has not provided further information on the Aave Pro implementation, when asked by The Defiant.

Big Interest

Kulechov previously teased Aave Pro on May 12, when he tweeted about a private pool for institutions to “practice before aping into DeFi.”

The implementation of this private pool tracks with the increased institutional interest in crypto seen throughout 2021. For example, major banking and payments companies like JP Morgan, Mastercard and UBS invested in blockchain software and development suite Consensys in April, and corporate entities like Amazon are integrating Ethereum into their business models.

It also signals that these players ̶ even equipped with large investments ̶ are cautious about entering a space that’s highly unregulated, complex and fast-moving.

The overall number of DeFi users, while growing quickly, is still extremely small. Currently, there are an estimated 2.4M DeFi users based on data compiled by 1confirmation’s Richard Chen using Dune Analytics, which tracks unique addresses interacting with major DeFi dapps. In light of this, serious institutional involvement in DeFi would likely be game-changing for the space.

It is unclear if institutions are currently utilizing the practice pool. Nevertheless, the existence of the pool suggests that there are institutions interested in DeFi and more specifically, Aave. 

Community Response

While many people signaled their satisfaction with the idea on Twitter, some members of the DeFi community weren’t happy with the prospect of Aave providing special resources for institutions.

Yearn Finance core dev Banteg retweeted Kulechov’s post saying that Aave Pro could be considered gatekeeping. Aave’s Frangella responded to that tweet, saying that everyone will be able to access Aave Pro with “the proper procedures,” although details about what the procedure is were not given. Frangella also hinted that more markets could be created in the future depending on community sentiment, but that there are three markets currently that all users can access  in a permissionless and decentralized manner.

Even with hard questions unanswered, the broader community seems to think this is a bullish signal.

Despite the recent overall downturn in the crypto markets, AAVE has been performing strongly. While the price of ETH dropped 15% over the past seven days, the price of AAVE has gained over 20% in the same period, and 12% in the past 24 hours alone. 
At time of writing, AAVE is trading at $633.