- Two Venture Capital firms, Three Arrows Capital and Framework Ventures invest $3 million in decentralized finance (DeFi) lending platform, Aave.
- The investment was made through the purchase of Aave’s native tokens, LEND.
In an announcement on Wednesday, confirms a $3 million investment in Aave Protocol, the third-largest DeFi app in total locked value. Framework Ventures and Three Arrows Capital directly purchased LEND tokens from the Aave Protocol Treasury, showing increasing interest from institutional investors in the DeFi industry.
According to the statement by Aave, the investment will be used in fostering decentralization of the lending and borrowing, token governance, new tokenomics, and an insurance fund in case of low liquidity on the platform. This investment will further DeFi protocol’s “mission of enabling global, permissionless tokenized assets money markets.”
Michael Anderson, CEO of Framework Ventures, believes the latest investment will help Aave strengthen its position as the private borrowing and lending assets moves to decentralized platforms. He said:
“Aave stands to significantly benefit from this underlying shift by enabling more assets as collateral, continuing to innovate with new lending features such as credit delegation and partnering with other DeFi protocols.”
The investors purchased around 30 million LEND tokens while it traded at $0.10. Following the rush in DeFi borrowing, lending, and yield farming, the token has since grown to $0.26, offering a 160% increase in the investor's ignition investment.
Framework and Three Arrows Capital have taken a rather strong stand in the DeFi space despite governments taking a closer look at the industry. The two companies will actively participate in Aave’s staking and governance systems following the investment.
Aave has rapidly grown into the third-largest DeFi platform since launching at the start of the year, and Stanley Kulechov, CEO of Aave, believes the latest partnership will scale its platform. He said:
“Their [Framework and Three Arrows Capital] involvement will bring substantial expertise to scale the protocol for institutional usage, and they will be helpful stakeholders within our community.”
Aave is taking up a range of crypto assets in its borrowing and deposit pool, including Tether (USDT) and Ethereum (ETH), to boost its liquidity pool. Notwithstanding, the platform also recently joined the Chicago DeFi Alliance and partnered with OpenLaw to launch ‘under-collateralized loans” through credit delegation.