The Aave's DeFi protocol allows users to stake their coins providing liquidity, in turn participants can burrow funds from the liquidity pools provided by the said users (for those providing sufficient collateral). Borrowers then in turn repay funds back with interest which provides a yield for the liquidity providers. (1)
Aave's institutional lending platform re-labelled Aave Arc (previously known as Aave Pro) will be ready to launch in August, unless there are further delays.
Aave Arc will provide institutional investors access to DeFi protocol, it will do this via private funding pools which are likely to produce a different yield than that of the public liquidity pools. Willing participants who pass a KYC (Know Your Customer) may qualify as liquidity providers in the private funding pool. Same applies to borrowers who wish to lend money from the private pool. (2) Aave's vision for Arc is to eventually move into a permissionless liquidity protocol for institutional investors (2), but in the initial stages feel that permissioned liquidity pools are a sufficient stepping stone. (3) If institutions begin burrowing money from DeFi protocols such as Aave, this further validates the real world use case of crypto assests.
If institutions get involved in DeFi this could be a trend that will catch on very quickly especially since fiat is quickly losing its value as the dollar becomes almost worthless. In the near future institutions will either have to sell off assests to raise capital or borrow from somewhere and I think that somewhere will be DeFi. Aave looks to have a very bright future ahead of itself and I believe it will become the Amazon of institutional DeFi.
