Permissioned Aave Arc Is “Simply A Gateway Into Permissionless DeFi,” Says Aave Founder On Adding Fireblocks As A Whitelister

While the Aave community is clear on onboarding institutions, with 89.67% votes in Fireblocks favor, others find it a “bad precedent.”


Aave’s institutional-focused product, the permissioned DeFi lending platform Aave Arc is inching closer to its release.

As a significant step towards this, a new proposal to “Add Fireblocks as a whitelister on Aave Arc” has been made to the Aave’s governance forum.

With more than 600 customers and over $1.25 trillion in digital assets, Fireblocks says it is on a mission to bring more institutional participants into DeFi. Fireblocks R&D, compliance, and legal teams have already developed a new whitelister framework for permissioned DeFi.

Fireblocks LLC is a registered “money services business” licensed to offer money transmission services in the United States.

According to the proposal, the institutional custody firm wanted to become a “whitelister” that would allow it to onboard institutions to the platform. The “permissioned” version of Aave protocol actually adds a smart contract layer to only allow “whitelisted” or “permissioned” users to engage with Aave Arc.

“Each Aave Arc deployment will launch with one or more whitelister,” says the proposal. As a whitelister, the regulated entity will conduct KYC/KYB checks in accordance with FATF guidelines on the user, onboard users with appropriate disclosures, terms, and conditions, and grant permissions to borrow, supply, and liquidity to the Ethereum wallet address(es) provided by the user.

Through this proposal, the Aave community is being asked to evaluate and vote on whether Fireblocks should be approved as a whitelister and begin the process of whitelisting users of an Aave Arc deployment.

While Aave believes Fireblocks “satisfies all the qualification requirements to be a whitelister,” not everyone in the crypto community is happy with this move, and Yearn Finance core developer Banteg is one of them.

As Jake Chervinsky, general counsel at Compound, believes, “this will just be a stepping stone for risk-averse institutions to ease their way into real DeFi,” Banteg also sees this to be the “optimal outcome” but said this would then be applied to other projects which will be asked to add KYC contracts as it has done by one DeFi protocol.

Chervinsky also agrees with this being a “bad precedent,” saying while there is institutional demand for these products, “I'd rather we work on convincing them to use DeFi.”

“Let someone else build walled gardens, or at least don't call it “permissioned DeFi,” an oxymoron if I've ever heard one.”

According to Stani Kulechov, “It's a private pool for institutions that are still practicing before aping into DeFi,” and on Wednesday this week, he tried to assuage some concerns.

“Aave Protocol is permissionless anyways, I don't think there is a way to rely on permissioned DeFi long term – anything permissioned build on top is simply a gateway into permissionless DeFi sooner or later.”

Aave community, however, is leaning towards making Fireblocks a “whiteliser,” with 89.67% votes in its favor. The voting for the proposal ends on Oct. 2.

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