Aave Approved 99.8% for Kraken Ink Blockchain Launch

Aave, a prominent decentralized finance (DeFi) lending protocol, has received overwhelming community support for its proposal to launch a centralized version of its service on Kraken’s Ink blockchain. The proposal, presented as an Aave request for comment (ARFC), was approved with 99.8% of the votes in favor. This ARFC acts as a preliminary offchain vote before proceeding with a full decentralized autonomous organization (DAO) vote. The next step involves drafting an Aave improvement proposal (AIP) that will be voted onchain.

The ARFC emphasizes that by granting a license to deploy a centralized version of the Aave codebase, Aave can expand its technology adoption while creating new revenue streams. This initiative is seen as an opportunity for Aave to extend its influence in the institutional lending space, potentially generating additional revenue for the protocol. The Aave DAO is set to receive a share greater than or equal to the equivalent of a Reserve Factor of 5% based on borrow volume in all pools. The Ink Foundation has also committed significant incentives to bootstrapping this instance, including multiple liquidity mining programs expected to bring over $250 million in early supply to the instance.

Kraken unveiled its Ink blockchain in late 2024, following an October announcement. The chain aims to serve as a compliant layer-2 platform for tokenized assets and institutional DeFi. This partnership represents a strategic move for Aave into a more centralized domain, with plans to launch on Kraken's Ink network. The centralized lending platform will utilize Aave V3 smart contracts, indicating broad community support for the initiative.

The announcement comes after Aave reached a total value locked (TVL) of $40.3 billion in mid-May. However, recent data shows Aave’s current TVL has dipped to about $33.5 billion, placing it second behind the liquid staking platform Lido, which holds $34.3 billion in assets. Despite this dip, the initiative is expected to expand Aave's presence in the institutional lending space and earn a share of Ink's revenue. This move underscores Aave's positive growth trajectory and its commitment to innovation in the DeFi space.