Aave, the largest DeFi lending protocol, is set to launch on Kraken’s Ink blockchain.
The Aave DAO proposal, created on July 17, aims to deploy a centralised version of Aave’s lending market on Ink. The new protocol will be controlled by the Ink Foundation under a new name, with a portion of revenue going back to the DAO.
“By granting a license to deploy a centralized version of the Aave codebase, Aave can expand its technology adoption while creating new revenue streams through partnerships with innovative platforms,” the proposal states.
Coming at a time when deposits into DeFi lending protocols are hitting record highs, Ink is looking to tap into this market and take advantage of Aave’s code.
Aave currently controls about half of the $65 billion lending market, according to DefiLlama. With nearly $32 billion in deposits, it is currently the secod-largest DeFi protocol.
Ink blockchain
Kraken, the US-based centralised exchange, launched its layer 2 blockchain Ink in December 2024.
The launch was met with little enthusiasm, bringing in less than $1 million in deposits within the first month.
With a fewer than two-dozen protocols, the chain has yet to become a major player in the competitive layer 2 landscape. As of Friday, protocols on Ink had just over $9 million in deposits, placing the blockchain well outside the top 100.
Volumes on decentralised exchanges on Ink have also underwhelmed, falling from a peak of about $195 million in May to $67 million in June.
Other centralised exchange-backed layer 2s have seen more success. Coinbase’s Base has over $5.7 billion in deposits while ByBit’s Mantle has over $250 million.
To buck this trend and encourage new users to join the blockchain, the Ink Foundation in June announced the upcoming release of an Ink token, along with several incentives for the blockchain’s users.
“The first use case for Ink tokens will be built around a liquidity protocol powered by Aave,” the Foundation said.
“To reward early usage, Ink tokens will be distributed to participants of the liquidity protocol through an airdrop.”
Among the incentives are multiple “liquidity mining” programs, according to the Aave proposal. Those programs are expected to draw $250 million to the yet-to-be-named Aave deployment on Ink.
Initially, 4% of the total Ink token supply has been allocated to users of Aave’s new lending platform. In addition to this, the Aave DAO will allocate a portion of Aave tokens and its stablecoin GHO as further bootstrapping incentives.
The Ink Foundation agreed to exclusively work with Aave for at least 12 months after deployment, refraining from communicating or integrating with any other lending protocols.
Currently, the proposal is receiving almost universal support from the Aave community, receiving about 412,000 votes in favour compared to only 1,600 against.
Voting ends on July 21.
Zachary Rampone is a DeFi correspondent at DL News. Have a tip? Contact him at [email protected].
