Aave has proposed a custodied collateral lending system that would allow institutions to borrow stablecoins on its protocol using assets held at regulated custodians like Anchorage. The collateral will remain at Anchorage and be represented on-chain via Chainlink’s Custodied Collateral Tokens (CoCTs), avoiding smart contract risks associated with wrapped assets. This approach targets assets currently unreachable for Aave: those held by institutional borrowers who cannot or will not self-custody. Aave founder Stani Kulechov called the proposal first-of-its-kind. The protocol currently holds a total value locked (TVL) of $19 billion, up 52% in Q3 from $12.5 billion in June.
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