Introducing On-Chain Aave Governance at Anchorage Digital
Diogo Mónica, Co-founder and President
Institutions can now simply and securely participate in Aave (AAVE) governance through on-chain voting provided by Anchorage Digital Bank. Aave is one of DeFi’s fastest growing protocols, with its governance token AAVE currently ranked in the top 30 of all cryptocurrencies by market cap. 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. 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.
“Democratizing access to Aave governance is key, and now more institutions will be able to participate in important protocol-level decisions thanks to Anchorage.”
-Stani Kulechov, Founder and CEO, The Aave Companies
Institutions holding governance tokens are well aware of the importance of participating in on-chain voting decisions. Until recently, however, that participation has been cumbersome and added additional risk moving offline assets on-chain in order to vote. Because the process has required significant 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. But governance systems benefit from robust and diverse participation in proposals and voting.
Participation Shouldn’t be a Dilemma
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.
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 clients can 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.
Safe, Secure Governance Participation
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. 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 decentralize decision-making by giving token holders a direct stake in the future of a protocol. Anchorage is proud to support a variety of governance tokens for custody, and support on-chain governance for protocols like MakerDAO, Celo, and Aave.
If you’re interested in a better way to participate in governance votes with Anchorage, please get in touch.
Holdings of cryptocurrencies and other digital assets are speculative and involve a substantial degree of risk, including the risk of complete loss. There can be no assurance that any cryptocurrency, token, coin, or other crypto asset will be viable, liquid, or solvent. No Anchorage communication is intended to imply that any digital asset services are low-risk or risk-free. Digital assets are held in custody by Anchorage Digital Bank National Association and are not guaranteed or FDIC-insured. All loans are made or arranged by Anchorage Lending CA, LLC pursuant to California Finance Lenders Law License №60DBO-119768. Any depictions of simulated or past loan performance are not necessarily indicative of future results.