Aave to Launch Centralized Lending on Kraken’s Ink Blockchain After Community Vote

July 21, 2025 — The Aave community has overwhelmingly approved a proposal to license a centralized version of its lending protocol for deployment on Kraken’s Ink blockchain.

With 99.8% voting in favor, the proposal now moves to the next phase of governance, signaling Aave’s entry into institutional DeFi on a compliant layer-2.

Aave Proposal Gains Strong Community Support

Aave’s governance forum passed an Aave Request for Comment (ARFC) to launch a centralized lending product on Kraken’s Ink blockchain. The Aave Kraken Ink proposal will allow a whitelabel version of Aave v3 to operate under a centralized model tailored for institutions. The next step involves an onchain Aave Improvement Proposal (AIP).

By licensing its code to Ink, Aave aims to expand its adoption beyond DeFi-native users and generate new revenue streams. The DAO will receive at least 5% of borrow volume as protocol income, similar to its Reserve Factor model.

Institutional DeFi Is the Target Market

The Ink blockchain, operated by the Ink Foundation and backed by Kraken, is designed to serve as a compliant, scalable platform for tokenized assets. According to the proposal, the partnership presents a strategic opportunity for Aave to grow its presence in the institutional lending sector.

To ensure early success, the Ink Foundation committed over $250 million to liquidity mining incentives for the new lending instance. These funds aim to bootstrap supply and attract institutional borrowers.

Aave’s TVL Dips, But Growth Remains Positive

While Aave’s total value locked (TVL) reached $40.3 billion in May 2025, data from DeFiLlama shows it has since declined to $33.5 billion. Despite the drop, Aave remains the second-largest DeFi protocol, trailing only Lido’s $34.3 billion.

The Aave Kraken Ink proposal is expected to diversify Aave’s user base and revenues, potentially offsetting recent TVL fluctuations with enterprise-focused expansion.

What Has Happened So Far

• October 2024: Kraken announced the Ink blockchain
• Late 2024: Ink launched as a compliant layer-2
• Mid-2025: Aave reached $40.3B in TVL
• July 2025: Aave ARFC for Ink passed with 99.8% approval
• Next Step: Drafting and onchain vote of Aave Improvement Proposal (AIP)