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The lending pool, which is intended for institutional buyers, would have KYC and AML limits.
The banks have let the cat out of the bag: Stani Kulechov, co-founder of decentralised finance money market protocol Aave, announced in a Tweet on Wednesday that the Aave protocol has created a “private pool” for organisations to “practise” before becoming involved with the DeFi ecosystem.
Earlier on Wednesday, a Twitter user aimed an angry tweet at Aave’s official Twitter account, claiming that his address had been “blacklisted” due to Anti-Money Laundering regulations:
— HMS RΞΞpΞr 🇫🇷 (@Fernjosh1) May 12, 2021
Kulechov himself referred to the tweet, first stating that there had been an error and that “the text is actually incorrect and relates to another pool we’re testing out,” before announcing the pool’s intended clientele:
No, you can always use Aave Protocol – the protocol is decentralized, running autonoumously on Ethereum network. The text is actually incorrect and relates to another pool we’re testing out 👀
— stani.eth 👻 =(⬤_⬤)= 👻 (@StaniKulechov) May 12, 2021
Ajit Tripathi, Aave’s head of institutional business growth, clarified to Cointelegraph that the protocol has planned a permissioned pool — the “private pool” concept in Kulechov’s Tweet was a misnomer in that the pool would be on public chains, but with permissioned access — explicitly for institutions. He defined the pool’s function as educational.
“It’s a great solution to promote collaborative learning across cefi and defi,” Tripathi said.
He mentioned that the approved test pool is intended to comply with AML regulations, and that all users will be subjected to Know Your Customer verification from appropriate partners. Furthermore, the pool could be added to mainnet earlier rather than later:
“We are in advanced stages of development. Please watch this space for more information.”
Although many AAVE token holders rejoiced at the prospect of institutional money entering the protocol, other users were cautious of what centralised institutions participating in DeFi might imply.
Pandering to institutions will kill this movement, mark my words. https://t.co/7AQTFcQD0P
— Ser Doggo IV, last of his name (@fubuloubu) May 12, 2021
However, Tripathi pointed out that, like DeFi itself, determining how organisations should engage in protocols is an open issue.
“This is a space of innovation and learning for both cefi and defi. As I said, institutions, the defi community and the regulators are all excited about the promise defi holds in creating fairer, more efficient and more inclusive financial infrastructure for everyone and we are grateful to be able to contribute to that.”