Decentralized lending platform Aave has launched the Aave Arc product, which will allow institutions to participate in DeFi. Aave Arc is a permission-based liquidity pool specifically designed for organizations to maintain regulatory compliance in the decentralized finance (DeFi) space, unlike its permissionless cross-chain counterparts on the platform.

Corporate companies will be able to join the DeFi industry without any compatibility issues through Aave Arc. Fireblocks, which offers institutional crypto asset custody services, became the first whitelisted user of the product. Fireblocks explained in its January 5 announcement that the pool "enables whitelisted entities to safely participate in DeFi as liquidity providers and lenders."

Aave Arc

Aave Arc users must complete review procedures such as know your customer and anti-money laundering (KYC/AML) to gain access.

Stani Kulechov, founder and CEO of Aave, told Blockworks.

   "Aave Arc allows institutions to interact with the Aave Protocol as any other user would, but in their own separate and authorized liquidity pool where each user is authenticated."

Kulechov said that the permitted Aave Arc has the same features as the Aave Protocol and complies with KYC and AML compliance standards.

   "This allows enterprises to enjoy virtually all the benefits of DeFi while remaining compliant with their compliance requirements."

Announced in July last year, the Aave Arc platform enables parties that pass financial due diligence to automatically lend and receive crypto assets to other parties. It works the same as Aave's main protocol work, but only approved parties can participate. Aave Arc will initially support Ethereum (ETH), wrapped Bitcoin (WBTC), USDC and Aave's native token AAVE.

Fireblocks Arc

Fireblocks co-founder and CEO Michael Shaulov said in a statement on the subject that he expects the world's largest institutions to start joining DeFi with the launch of Aave Arc.

Fireblocks, the first whitelisted company, will conduct due diligence on institutions wishing to lend or borrow crypto assets through the platform. Fireblocks will use globally accepted KYC and due diligence procedures per FATF guidelines when deploying organizations to DeFi. In addition, names such as Celsius, CoinShares SEBA Bank, Bluefire Capital, GSR, Ribbit Capital, QCP Capital and Wintermute were also whitelisted.

Rich Rosenblum, co-founder and president of GSR, also described the launch of Aave Arc as a crucial step for the DeFi space.