Hassan Maishera
On Tuesday, Aave Labs announced via X that it has submitted a new governance proposal to introduce Custodied Collateral Lending, powered by Aave V4.
If approved, it would allow institutions to borrow stablecoins on Aave against assets held in custody at Anchorage, synchronized through Chainlink infrastructure. Anchorage would hold the underlying collateral for the duration of the loan, operate the collateral management system that serves as the source of truth for balances and lifecycle events, and execute liquidations as an OTC sale of the underlying asset.
Chainlink CustodySync would mirror custodial balances onchain with a non-transferable receipt token, and Chainlink price feeds would give both Aave and the custodian the same data, keeping LTV in sync. Borrowed stablecoins would route to the borrower in a single transaction.
Aave is a decentralized finance protocol that allows people to lend and borrow crypto. Lenders earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out a flash loan using this liquidity.
Aave (which means “ghost” in Finnish) was originally known as ETHLend when it launched in November 2017, but the rebranding to Aave happened in September 2018. (This helps explain why this token’s ticker is so different from its name!)
AAVE provides holders with discounted fees on the platform, and it also serves as a governance token — giving owners a say in the future development of the protocol.
Aave protocol is a decentralized, open-source, and non-custodial money market protocol. Depositors earn interest by providing liquidity to lending pools, while borrowers can obtain overcollateralized loans by using the liquidity from these pools. AAVE is trading at $118.49 per token, down 6.7% in the last 24 hours.
The project allows people to borrow and lend in about 20 cryptocurrencies, meaning that users have a greater amount of choice. One of Aave’s flagship products is “flash loans,” which have been billed as the first uncollateralized loan option in the DeFi space. There’s a catch: they must be paid back within the same transaction.
