Anchorage Digital Bank Now Allowing Institutions to Participate in Aave Governance via On-Chain Voting

Anchorage Digital, which aims to advance institutional participation in the digital assets space, reveals that institutions are now able to take part in Aave (AAVE) governance via on-chain voting offered by Anchorage digital bank.

Aave is an open-source and non-custodial protocol for generating interest on deposits and borrowing assets.

Diogo Mónica, Co-founder and President at Anchorage, noted that institutions can now “simply and securely participate in Aave (AAVE) governance through on-chain voting provided by Anchorage Digital Bank.”

Diogo explained that Aave is one of decentralized finance’s (DeFi) fastest growing protocols, with its governance token AAVE consistently ranked in the top 30 of all cryptos in terms of market capitalization.

As mentioned in the blog post from Anchorage, Aave is a decentralized, open-source liquidity protocol where “suppliers earn yield by providing liquidity to liquidity pools, while borrowers can obtain liquidity by tapping into these pools with variable and stable interest rate options.”

The Anchorage team also mentioned that participation in Aave governance “is critical for the growth of the protocol, as governance (through voting) determines changes in all aspects of the protocol including but not limited to risk parameters, upgrades and the like.”

Stani Kulechov, Founder and CEO, The Aave Companies, stated:

“Democratizing access to Aave governance is key, and now more institutions will be able to participate in important protocol-level decisions thanks to Anchorage.”

As noted in the announcement, institutions holding governance tokens are “well aware of the importance of participating in on-chain voting decisions.”

Until recently, however, that participation has reportedly been “cumbersome” and involved additional risk “moving offline assets on-chain in order to vote.” Since the process has required considerable effort to bring governance tokens from cold storage on-chain, “many institutions do not participate in the voting process despite having full ability to vote on any proposal,” the Anchorage team revealed.

However, governance systems “benefit from robust and diverse participation in proposals and voting,” Anchorage’s blog post noted.

As mentioned in the update:

“At Anchorage, we believe institutions shouldn’t face a security trade-off when it’s time for a vote. Now, with support for Aave governance, Anchorage clients can easily vote on decisions with offline assets directly through the Aave governance portal.”

The announcement further noted:

“Anchorage removes the cold versus hot wallet paradigm any institution familiar with voting knows all too well. Instead of a “cold wallet trade-off” entailing a long and arduous process each time there’s a vote, Anchorage connects institutions quickly. And rather than a “hot wallet” security trade-off, institutions can participate while their key remains offline, without having to risk their holdings.”

Now, Anchorage customers are able to vote for or against proposals or “delegate their governance powers to another delegatee, just as any AAVE token holder can, but without compromising the security of their holdings,” the update confirmed.

As noted in Anchorage’s blog post, the delegation model for the AAVE token “enables a separation of duties, where one private key can hold AAVE tokens, and the other can be used in voting.” This means Anchorage is able “to provide offline security during the voting process.”

As stated in the update:

“When it’s time to vote, Anchorage is able to keep the private key holding assets safe and secure, while organizations can delegate a separate private key for participating in governance voting.”

Governance tokens aim to “decentralize” decision-making by giving token holders “a direct stake in the future of a protocol.” Anchorage is pleased to extend support to several different governance tokens “for custody, and support on-chain governance for protocols like MakerDAO, Celo, and Aave.”

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