Anchorage Offers Blockchain Governance Voting Services, Starting With DeFi Major Aave

Regulated cryptocurrency custody firm Anchorage is offering blockchain governance voting services, starting with decentralized finance (DeFi) major Aave.

Anchorage, a regulated cryptocurrency custody firm, is now offering blockchain governance voting services, starting with decentralized finance (DeFi) major Aave, the two companies announced Thursday.

Through Anchorage’s governance portal, institutions and token holders can participate in critical on-chain governance decisions pertaining to the Aave lending protocol. The system utilizes a separate voting key to ensure that digital assets remain securely stored, according to the announcement.

Moving cryptocurrencies, particularly from “cold” or offline storage to online “hot” wallets, poses inherent risks. Many institutions holding governance tokens have expressed concerns regarding the cumbersome and risky nature of bringing offline digital assets on-chain for the purpose of voting, despite their strong desire to participate in making changes to a protocol — such as setting risk parameters and proposing upgrades.

“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 with CoinDesk, 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 kicking things off 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, Mónica told CoinDesk.

“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,” said Mónica. “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.”

Aave currently ranks as the top DeFi platform by total locked value (TVL), with over $14 billion, 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.