Kraken Weighs Buying 15% of Aave Group Ahead of IPO in DeFi Push
Summary
- Kraken is discussing the acquisition of a 15% stake in Aave (AAVE) Group as it pushes to expand its DeFi business.
- The deal could mark the first step in building Payward Asset Management, with Kraken considering an investment of 35,000 Ether (ETH) in exchange for 250,000 AAVE tokens.
- Aave is the largest DeFi lending protocol, but it has also faced fallout from the KelpDAO hack, bad debt and large-scale fund outflows.
Forecast Trend Report by Period
Kraken, the global cryptocurrency exchange, is in talks to acquire a 15% stake in DeFi lending protocol Aave as it speeds up its expansion in decentralized finance ahead of a planned initial public offering.
CoinDesk reported on June 25, citing multiple sources, that Kraken is discussing a deal for a 15% stake in Aave Group based on a $385 million valuation.
The proposal under review would have Kraken invest 35,000 Ether in exchange for 250,000 AAVE tokens and a 15% stake in Aave Group common stock. At current market prices, the transaction would be worth about $71 million.
The sources said Kraken is also considering a syndicated structure that would bring in outside investors. Kraken declined to comment on the report, while Aave did not provide a separate response.
The investment could become the first deal for the asset-management business being developed by Kraken parent Payward. One source described the transaction as the first step in building Payward Asset Management and part of a strategy to expand into a wider range of investment opportunities, including DeFi.
Aave is the largest lending protocol in the DeFi market. Users can deposit crypto assets to earn interest or borrow assets against collateral without an intermediary.
The protocol, however, suffered heavy outflows after the April hack involving KelpDAO's cross-chain bridge. An attacker linked to North Korea's Lazarus Group minted about $292 million of unsecured rsETH, posted it on Aave as collateral and borrowed assets against it. Aave's smart contracts were not hacked, but the collateral later lost its value, leaving $190 million to $230 million in bad debt. Users withdrew more than $8 billion in assets.
Kraken has also accelerated expansion through acquisitions ahead of its IPO. In April, it announced the acquisition of crypto derivatives exchange Bitnomial in a deal worth up to $550 million. Last month, it was also reported to be seeking fresh funding at a valuation of about $20 billion.
YM Lee
20min@bloomingbit.ioCrypto Chatterbox_ tlg@Bloomingbit_YMLEE