Aave Arc - What happened?

We all probably remember Aave Arc being launched with Fireblocks having 30 trading firms on the whitelist. This was January 2022.

Fast forward and Arc had a slow trend up from ~$6M TVL to close to $8M with a sudden drop in 2 parts, second one basically emptying Arc. This second one on Nov 23rd seems like 1 institution just pulled the whole plug on it, and now its empty?

What has happened? This does not sound like 30 trading firms using Arc. This looks like maybe 1 or 2 did and stopped again last November (was it FTX?).

So a request to the Aave BD team, what has happened to Aave Arc? What are the plans around it? How will Aave Arc get back on its feet?


It’s also something that crossed my mind a few weeks ago, expected a lot from AAVE Arc

Yeah it is a bearish sign for KYC-Fi I’d say.

Hey @dvrij – good topic.

Arc at its genesis was an exciting product, targeting institutions and larger borrowers.

There were a few intriguing proposals too:


It was additionally one of the reasons we shifted away from ARC β†’ ARFC in Governance: to lead to less confusion. IMO, what happened to Arc also happened to a majority of crypto products.

Rates were raised, directly impacting risk assets.

Institutions who were curious were told to refocus β€” and exploits and hacks errored faith in on-chain products. All of this is to say Arc had a lot of headwinds.

In the meantime, Coinbase and others have developed cleaner on-ramps targeting institutions.

More outreach, more support, and a powerful marketing channel.

If Aave wants to grow this market we need to re-invest in business development. The community has signaled a preference for growing other Aave products (V3, GHO) over Arc in the interim.

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Thanks for this response.

Arc will come back but as special purpose (OCA) GHO facilitators.

From experience, The main bottleneck on ARC was not demand side but supply side.

With GHO, the protocol is the β€œLP” so efficiency is unmatched.

the ACI is already working with quite a few Off-Chain collaterals (OCA) entities and will create proposals for the DAO when GHO will have enough maturity.