The company behind Kraken has directly bought AAVE.
On November 5, Aave made an announcement:
An investment fund affiliated with Kraken parent company Payward, along with its clients, has bought AAVE on the secondary market.
The exact amount has not been disclosed.
But I think this transaction deserves a closer look.
Previously, institutional involvement in DeFi mostly took the form of partnerships, protocol integrations, or infrastructure provision. This time, Payward and its clients are directly holding AAVE, which means they are willing to take on the token's price risk.
Aave's business also has some fundamentals to support it.
The protocol currently has about $33 billion in net deposits and around $11 billion in active loans.
However, it's important to distinguish between a protocol managing a large amount of funds and AAVE holders actually receiving a corresponding return.
I'll be keeping an eye on two questions:
■ Will Payward continue to increase its holdings or pursue deeper business partnerships?
■ How much value can $AAVE in lending volume and protocol revenue growth ultimately bring to AAVE?
The second point in particular is directly tied to the valuation the market is willing to give it.
Of course, institutional buying doesn't mean the price has bottomed, and Payward hasn't publicly committed to holding AAVE long term.
But in this market environment, the fact that an institution is still willing to spend real money on a DeFi token at least suggests that some people still recognize AAVE's business value.
Now it's a matter of seeing whether protocol revenue and fund flows can keep up.
On November 5, Aave made an announcement:
An investment fund affiliated with Kraken parent company Payward, along with its clients, has bought AAVE on the secondary market.
The exact amount has not been disclosed.
But I think this transaction deserves a closer look.
Previously, institutional involvement in DeFi mostly took the form of partnerships, protocol integrations, or infrastructure provision. This time, Payward and its clients are directly holding AAVE, which means they are willing to take on the token's price risk.
Aave's business also has some fundamentals to support it.
The protocol currently has about $33 billion in net deposits and around $11 billion in active loans.
However, it's important to distinguish between a protocol managing a large amount of funds and AAVE holders actually receiving a corresponding return.
I'll be keeping an eye on two questions:
■ Will Payward continue to increase its holdings or pursue deeper business partnerships?
■ How much value can $AAVE in lending volume and protocol revenue growth ultimately bring to AAVE?
The second point in particular is directly tied to the valuation the market is willing to give it.
Of course, institutional buying doesn't mean the price has bottomed, and Payward hasn't publicly committed to holding AAVE long term.
But in this market environment, the fact that an institution is still willing to spend real money on a DeFi token at least suggests that some people still recognize AAVE's business value.
Now it's a matter of seeing whether protocol revenue and fund flows can keep up.