Key facts
- Kraken is in talks to acquire a 15% stake in DeFi protocol Aave.
- The potential deal values Aave at $385 million.
- The investment would consist of 35,000 ether (ETH) and a 15% common equity stake in Aave Group.
- Kraken is considering syndicating the deal, which is worth approximately $71 million.
- This move aligns with Payward Asset Management's strategy to increase its role in DeFi.
- Aave is the largest decentralized lending protocol.
Kraken, the cryptocurrency exchange operated by Payward Inc., is reportedly in discussions to acquire a 15% stake in the decentralized finance (DeFi) lending protocol Aave. The potential transaction values Aave at $385 million, according to sources familiar with the matter.
The proposed deal would involve Kraken investing approximately 35,000 ether (ETH) in exchange for 250,000 AAVE tokens and a 15% common equity stake in Aave Group. Sources indicate that Kraken is also exploring syndicating the deal, which is valued at around $71 million.
This investment is seen as a strategic move for Payward Asset Management, aiming to build out its presence in DeFi and other investment opportunities. It comes as Kraken's parent company, Payward, prepares for a potential initial public offering (IPO) and seeks to diversify its business by expanding its regulated trading infrastructure.
Aave, known as the largest decentralized lending protocol, allows users to lend and borrow crypto assets without intermediaries. The protocol recently faced challenges after an exploit on KelpDAO's cross-chain bridge, which led to attackers minting unbacked tokens and depositing them as collateral on Aave. This resulted in significant bad debt, estimated between $190 million and $230 million, and triggered over $8 billion in withdrawals, highlighting the interconnected risks within the DeFi ecosystem, despite Aave's own smart contracts remaining uncompromised.
Kraken's parent company has been actively pursuing acquisitions, including the recent agreement to acquire crypto derivatives exchange Bitnomial for up to $550 million, to bolster its CFTC licenses and build a multi-asset platform.