The central theses
- Aave is working with CrescoFin to open a decentralized money market.
- CrescoFin aims to bring the benefits of insured savings to the blockchain.
- Developing is a possible first step towards institutions that turn to DeFi to manage their money.
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Aave, one of the most established DeFi protocols, is starting a money market.
The development is thanks to a partnership with CrescoFin, a Swiss banking company that advocates decentralized financing.
CrescoFin announced collaborated on a blog post by Medium on Tuesday highlighting the benefits of DeFi’s insured savings offering and Aave’s strong security data. The Swiss company highlighted its plans for an “institutional takeover” and cited Aave’s focus on security as a “necessary requirement” to attract potential investors.
The topic of “institutional money” was constantly discussed in the blockchain area. While several major investors have warmed to Bitcoin in recent months, certain characters suggest that institutional adoption within DeFi was slower.
CrescoFin hopes that the integration with Aave will provide investors with a “safe savings option” which in turn will usher in a wave of adoption. The company has also confirmed that the evidence of reserves and price information is provided via the chainlink pricing oracle.
The money market allows investors to deposit funds into the log, with insured tokens being provided in exchange for adding collateral. The tokens are then burned when the investor withdraws their money.
Higher interest rates are paid to those who lend over an extended period of time, effectively creating what is known as a “yield curve”. It could also allow DeFi users to use “Money Legos” – a term often used to describe the process of interacting with multiple smart contracts with composition ability.
This is a promising sign of progress for DeFi as a whole. The announcement notes that insured savings are not yet available in DeFi but are widely viewed as fundamental elements of the traditional financial system.
CrescoFin highlighted Aave’s reputation as a key player in the DeFi ecosystem, particularly the team’s “calming, long-term commitment” to the space.
“The amount of institutional money likely to flow into DeFi over the next few years is enormous and Aave is well positioned to raise a significant amount of that funding,” they wrote.
Aave has quickly become one of the most widely used DeFi protocols. Today, the total locked value is around $ 1.3 billion, up a factor of 4,000 since the beginning of the year.
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