According to the news sources, decentralized finance (DeFi) lending platforms, Aave and Compound are launching platforms with the aim to attract institutional investors.
In May 2021, Aave announced its decision to collaborate with Fireblocks to launch a decentralized liquidity protocol called Aave Pro, to meet the extensive demands from many institutional investors. Aave Pro, which uses V2 smart contracts, adds a layer of whitelisting which allows access to only those users who have completed their Know Your Customer process. Aave Pro was launched in July, with an aim to provide the corporates and institutions with access to DeFi yields. It will also allow them to derive benefits from the automated and transparent process.
Only certain digital assets like Ethereum, Bitcoin, AAVE, and USDC have been included in the liquidity pool of Aave Pro, as of now. This was because most of the institutional investors demanded these cryptos. According to the announcement, the liquidity pool containing these assets will be available on the Aave Polygon marker and the Aave V2 market, after segregating it from other liquidity pools of Aave. Fire blocks will be responsible for facilitating the onboarding process for corporates, institutions, and fintech companies. Besides this, it will also implement anti-fraud controls and AML compliance on the Aave Pro market.
Compound Finance, which is a decentralized lending protocol backed by Coinbase, has also come out with Compound Treasury, which aims to deliver the benefits of DeFi to the non-crypto financial institutions. The Compound Treasury will allow businesses and institutional investors an opportunity to access the Compound protocol. It will offer a fixed APR of 4 percent on US dollars along with daily liquidity. However, there will be none of the complexities which are usually associated with crypto. The platform has also partnered with Fireblocks and Circle to provide the USDC market interest rates to the fintech startups, Neobanks, and other large institutions.
