Regulated cryptocurrency custody firm Anchorage is offering blockchain governance voting services, starting with decentralized finance (DeFi) major Aave.
Institutions and token holders can use Anchorage’s governance portal to participate in on-chain governance decisions critical to the Aave lending protocol. The system uses a separate voting key so that digital assets can remain safely in storage, the companies said Thursday.
Moving cryptocurrencies, especially from “cold” or offline storage, to online “hot” wallets, creates risk. Bringing offline digital assets on-chain in order to vote has been viewed as cumbersome and risky by many institutions holding governance tokens, despite the growing desire to participate in changes to a protocol, such as setting risk parameters, proposing upgrades and the like.
“Today we see large venture firms and crypto funds that are very active in the communities proposing changes to the protocol and using their own governance tokens to vote,” Anchorage co-founder Diogo Mónica said in an interview, adding:
“That’s something you didn’t really see a year and a half ago. There was value to holding these tokens, but people were just storing them in custody.”
Anchorage is starting with Aave but the broader selling point to the institutional DeFi market is the ability to have secure governance participation without exposing the keys themselves, he said.
“A lot of these protocols are following this process by which you can have one private key that holds the tokens and then another that is used for voting,” Mónica said. “We can delegate to some other key the ability to vote on these protocols. It’s a generalized capability that Anchorage has that’s going to be mimicked on many protocols.”
With over $14 billion in total locked value (TVL), Aave currently tops the leaderboard of DeFi platforms, according to DeFi Pulse.
“Democratizing access to Aave governance is key, and now more institutions will be able to participate in important protocol-level decisions thanks to Anchorage,” Aave founder Stani Kulechov said in a statement.