Crypto exchange Kraken, operating under parent company Payward Inc., is in active negotiations to acquire a 15% equity stake in decentralized finance lending protocol Aave at a $385 million valuation, according to three people with knowledge of the matter.
Deal Structure
The proposed transaction would see Kraken invest 35,000 ether (ETH) in exchange for 250,000 AAVE tokens plus a 15% common equity stake in Aave Group, according to a document reviewed by sources. The deal is valued at approximately $71 million in total.
Two sources said Kraken is also exploring syndicating the deal to additional investors. Both sources spoke on condition of anonymity because the matter is private. A Kraken spokesperson declined to comment, and Aave did not respond to a request for comment before publication.
Payward Asset Management Play
A third source familiar with Payward’s plans said the Aave investment would be the first in a series of deals designed to build out Payward Asset Management, with the firm seeking a more active role in DeFi and broader investment opportunities. The source noted Payward has capital to support the strategy and partners already involved who want to fund these types of deals.
Aave’s Troubled Recent History
The proposed investment comes as Aave works to recover from one of DeFi’s largest crises. In April, attackers linked to North Korea’s Lazarus Group exploited KelpDAO’s cross-chain bridge to mint roughly $292 million in unbacked rsETH tokens. The hackers then deposited the tokens as collateral on Aave and borrowed real assets against them, leaving the protocol facing an estimated $190 million to $230 million in bad debt when the collateral lost all value.
Aave’s own smart contracts were never compromised, but the fallout was severe. More than $8 billion in user deposits exited the protocol as depositors rushed to reduce exposure, exposing the contagion risks running through DeFi’s interconnected ecosystem.
Kraken’s Acquisition Push
The potential Aave deal fits a broader pattern of acquisitions by Payward ahead of a widely anticipated IPO. In April, Payward agreed to acquire crypto derivatives exchange Bitnomial for up to $550 million in cash and stock, adding a full suite of US CFTC licenses covering brokerage, clearing, and exchange operations. CoinDesk reported in May that Payward was raising new capital at a $20 billion valuation.
What It Means for Aave
For Aave, a $71 million institutional investment would mark a notable vote of confidence as the protocol rebuilds from the KelpDAO fallout, while the 250,000 AAVE token component would give Kraken direct governance exposure to the protocol. Kraken’s interest in syndicating the deal points to broader institutional appetite to back Aave’s recovery. Aave remains the largest decentralized lending protocol, allowing users to supply tokens to liquidity pools to earn yield while borrowers post crypto collateral for loans managed entirely by smart contracts.
