Aave Proposal Enlists Fireblocks to Aid DeFi Protocol’s Mainstream Finance Push

In a governance proposal, Fireblocks is aiming to become the first Aave Arc whitelister – an initial step that could lead to new frontiers in “institutional DeFi.”

Sep 27, 2021 at 5:12 p.m. UTC
Updated Sep 27, 2021 at 6:32 p.m. UTC

Aave Arc may be close to onboarding its first “whitelister” – a possible step towards institutional users integrating with the decentralized lending platform.

In a proposal on Aave’s decentralized autonomous organization (DAO) governance forum on Monday morning, user “salmanblocks” called for adding Fireblocks as the first whitelister on the compliant implementation of Aave. Rob Salman, the head of business development for Fireblocks, submitted the proposal on behalf of the company, a spokesperson told CoinDesk.

“Fireblocks’ R&D, compliance and legal teams have developed a new whitelister framework for permissioned DeFi. This framework meets both enterprise-grade requirements for accessing DeFi and adheres to Aave Arc’s whitelister governance criteria,” salmanblocks wrote.

Aave Arc is an implementation of the Aave version 2 code designed to allow institutions to enforce regulatory compliance. Whitelisters would ensure that users of these permissioned lending pools comply with relevant laws depending on the jurisdiction of the user. Here to date, the permissionless nature of DeFi, where lenders do not know who they’re lending to, has been a key blocker for corporate legal teams.

In a statement to CoinDesk, Aave founder Stani Kulchov said this initial proposal could be the first in a string of potential whitelistings.

“Fireblocks aims to be the first whitelister and would add new whitelisters as well over period of time,” he wrote in an interview on Telegram. “Whitelister can be anyone that fulfills similar compliance requirements that Fireblocks initiated the market with.”

The majority of the proposal breaks down Fireblocks’ regulatory bona fides, noting that the company “is a registered ‘money services business’ in good standing with FinCEN” and that it is up to speed with the latest know-your-customer and anti-money laundering standards set forth by global watchdogs.

New products

The proposal also noted the significant possible benefits adding Fireblocks as a whitelister could bring to the Aave community.

For one, bringing on Fireblocks as a whitelister could aid in “the creation of sustainable governance practices for Aave Arc whitelisters and whitelister customers.”

Major firms participating in DAOs have led to notably mixed results. Perhaps the highest-profile instance is Andreessen Horowitz, which is working to open source its governance delegation model following a pair of contentious governance votes.

Approving Fireblocks could also lead to integrations enabling new products, “such as the onboarding of regulated fiat on/off ramps and protocol deployments connected to debit cards, high yield savings accounts and other innovative fintech products,” the proposal said.

Kulechov said he would not be voting on the proposal, a personal policy in Aave’s governance “even when as interesting a proposal as it is.”

“All in one, it’s a big step forward for getting a new demographic into DeFi and would definitely make DeFi more accessible to more risk-averse users,” Kulechov wrote.

The proposal has been viewed 55 times at the time of writing. If the proposal proves to be “non-contentious,” then it will move to a formal voting period, per an explanatory post on the forums.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Andrew Thurman is a tech reporter at CoinDesk with a focus on DeFi.