Aave Labs, the main development contributor behind crypto lending giant Aave, proposed deploying Aave V4 on Arc at or near the network's mainnet launch.
Under the proposal, outlined in a June 19 governance forum post, the initial deployment would support mainly Circle's own assets: USDC, EURC, wETH and cirBTC, Circle's wrapped Bitcoin launched earlier this year.
The launch would begin conservatively with borrowing and lending limits capped before gradually expanding as the market develops.
- Aave Labs argues the deployment would help position Aave as a "core lending protocol" on Arc from day one, expand the use of Circle-issued assets and bring additional institutional liquidity into the Aave ecosystem.
- Arc is a public Layer-1 blockchain developed by Circle, the company behind the USDC stablecoin.
Read also: AAVE price could soar 133% in Grayscale base case
According to the proposal, Aave DAO, the decentralized organization governing the protocol, would receive at least $2 million annually from the Arc deployment.
Aave Labs
- However, the proposal doesn't name which Arc ecosystem participants would cover any revenue shortfall, nor does it spell out the exact conditions or mechanism for making Aave DAO whole.
The initial Arc deployment would consist of one central liquidity hub and two connected markets, or spokes.
- One would focus on broader lending activity, while the second would focus on foreign-exchange style borrowing and lending between USDC and EURC.
The proposal is still early in Aave's governance process. Risk provider LlamaRisk is expected to review the deployment before token holders vote on whether to move the plan forward.
More context: Circle unveils Arc whitepaper, ARC token utility design