Written by: Tia, Techub News
On November 13, Aave Labs announced that its subsidiary Push has obtained a crypto asset service provider (CASP) license from the Central Bank of Ireland under MiCAR (EU Regulation on Markets in Crypto-Assets). This event not only makes Aave one of the first DeFi developers to operate legally under the MiCAR framework in Europe but also marks a profound shift in its strategic direction: Aave is transitioning from a purely on-chain lending protocol to a compliant financial infrastructure, building bridges for the GHO stablecoin and off-chain fiat channels.
Strategic Opportunity: From Protocol to Infrastructure
For Aave, the acquisition of the CASP license by Push is not only a compliance milestone but also signifies its business strategy's transformation from a simple on-chain lending protocol to a comprehensive financial infrastructure provider. In the traditional DeFi model, Aave's core value lies in providing non-custodial on-chain lending and liquidity services, allowing users to deposit, borrow, and swap interest rates directly through the protocol. However, while this model is decentralized, it still has inherent limitations in real-world payments and fiat exchanges. Users cannot directly use crypto assets for everyday consumption or easily convert assets into euros or other fiat currencies, which somewhat restricts the mainstream adoption and scaling of DeFi.
The license and services provided by Push fill this gap by directly connecting on-chain assets with the real fiat world, providing legal recharge and withdrawal channels for the GHO stablecoin, making it not only a liquidity medium for on-chain lending but also a financial tool for payments, settlements, and cross-border transactions. This means individual users can directly use GHO for online or offline payments, while business users can utilize it for payroll, supply chain payments, or international remittances. This closed-loop ecosystem of on-chain and off-chain interactions allows Aave's products to extend beyond internal protocol circulation and be applied in real financial scenarios.
It is noteworthy that Aave connects directly with regulatory agencies through its self-built compliant entity, rather than relying on overseas trusts or third-party compliance structures like other DeFi projects. This model not only enhances efficiency but also strengthens control over asset liquidity within the ecosystem.
Thus, the GHO stablecoin can be used within the Aave lending protocol and can also serve as collateral or a trading medium in other DeFi products; Push, as a fiat entry point, can integrate with wallets, payment applications, merchant services, and corporate settlement systems, enabling the free flow of user assets between on-chain and off-chain; at the same time, Aave's core protocol maintains decentralized governance and liquidity incentive mechanisms, ensuring the vitality and fairness of the ecosystem. Through this multi-layered strategic layout, Aave is not only building a complete ecosystem within DeFi but is also gradually becoming an infrastructure provider connecting crypto finance with real financial markets.
In the future, Aave can leverage Push and GHO to build a stablecoin payment network, providing merchants with on-chain settlement APIs; supporting corporate and institutional users in conducting legal transactions globally through compliant channels; and further enriching the financial tools and product portfolio by combining collateral management and smart lending, achieving diversification of on-chain financial services.
After Push obtained the MiCAR license, Aave Labs also announced that it will launch zero-fee recharge and withdrawal channels for GHO and other stablecoins in Europe, covering multiple products within the Aave ecosystem. This means that individual and institutional users can transfer fiat into DeFi or convert on-chain assets into euros or other fiat currencies without incurring additional costs, creating a truly seamless "cash-DeFi" experience. Previously, fiat channels often came with fees and cumbersome processes, limiting participation from ordinary users, and this initiative directly eliminates that friction, lowering the entry barrier.
Aave's Compliance Efforts Are Not New
Aave's exploration of compliance can be traced back to the second half of 2022 and early 2023. At that time, global regulators were increasingly focused on stablecoins and decentralized finance, especially as the EU proposed clear requirements for crypto asset service providers (CASP) under the MiCAR framework. The Aave team realized that relying solely on the decentralized characteristics of on-chain protocols was no longer sufficient to meet the compliance needs of real financial markets and institutional investors. Therefore, to strike a balance between compliance and decentralization, Aave decided to establish an independent subsidiary, Push, to handle regulatory-related business while maintaining the decentralized nature of the core protocol.
It is worth noting that prior to Push, Aave had already conducted an early compliance experiment—the institutional version of the compliant DeFi platform Aave Arc launched in 2022. Aave Arc attempted to provide a "regulated DeFi environment" for institutions by introducing mechanisms such as KYC and permissioned pools. However, due to institutions' lingering doubts about on-chain risks, capital efficiency, and asset custody, the adoption of Aave Arc remained limited, and it eventually faded from public view. This experience served as an important reminder for Aave: compliance alone does not automatically generate real demand or ensure sustained usage of the protocol.
Building on the lessons learned from Aave Arc, Aave became more aware of the necessity of "functional layering" between compliance and decentralization. Therefore, to achieve a balance between regulatory frontiers and protocol autonomy, Aave decided to redesign its compliance architecture: the independent subsidiary Push would specifically handle fiat entry, user identity verification, compliance modules, and other off-chain business, while on-chain lending, risk management, and governance would remain within the decentralized Aave protocol.
The establishment of Push has a clear goal: to build a truly scalable compliance bridge between the Aave ecosystem and the fiat world, allowing the GHO stablecoin and other on-chain assets to be legally utilized in real payment, cross-border circulation, corporate accounts, and financial institution custody scenarios. The core considerations behind this strategy include: responding to increasingly stringent regulatory pressures; expanding the institutional and mainstream user market; and providing a standardized entry for asset inflows while maintaining the decentralized essence of the protocol.
In advancing this route, Aave has gradually rolled out substantial deployments since 2023, including collaborations with banks and payment institutions to test compliant fiat channels and provide users with compliant recharge and withdrawal processes. The path will reach a critical milestone in 2024: Push will receive formal CASP authorization from the Central Bank of Ireland under MiCAR, making Aave one of the first DeFi development teams to operate legally under the new regulatory framework in Europe. This license enables Push to officially provide zero-fee on/off ramp services for stablecoins in the European Economic Area, creating regulated fiat entry points for GHO, USDC, and other stablecoins, and offering compliant and convenient financial channels for institutional investors, business users, and ordinary individuals.
Through the long-term establishment of this structured path, Aave has ultimately formed a "dual-layer system" with clear divisions of labor: the on-chain protocol remains decentralized, while off-chain fiat channels and regulatory affairs are managed by Push. This architecture not only reduces regulatory risks at the protocol level but also provides the necessary infrastructure for DeFi products to land compliantly in mainstream financial markets, while enhancing the feasibility of the GHO stablecoin's application in real-world scenarios.
From a broader perspective, Aave's strategic evolution is reflecting three key trends:
Mainstreaming and Institutionalization: Push's compliance license introduces institutional-level fiat entry into Aave's ecosystem, making stablecoins and lending protocols more likely to enter corporate and financial institution systems, promoting the GHO's presence in real financial transaction scenarios.
Ecosystem Closure and Cross-Border Expansion: Aave is building a complete closed loop from on-chain protocols, stablecoin issuance, fiat channels to payment integration, making cross-border settlements, multinational applications, and multi-domain circulation possible.
DeFi-TradFi Integration: Through the modular division of labor between compliant entities and decentralized protocols, Aave is exploring a financial model with extensibility, providing a replicable paradigm for the deep integration of DeFi and traditional finance in the future.
Potential Risks: The Compliance Path Is Not Smooth
However, Aave's compliance route is not without costs. While the establishment of Push and the advancement of compliance address the structural issue of "on-chain protocols being unable to directly access the fiat system," they also expose the core structural conflicts that DeFi projects face when confronted with regulatory realities: once entering a regulated domain, they must accept a complete set of financial regulatory frameworks, including identity verification, fund flow monitoring, risk assessments, and anti-money laundering requirements, which means that the power of off-chain entities will inevitably rise. This "compliance entity-driven business expansion" model causes lending protocols, which originally relied purely on smart contracts, to begin to exhibit unavoidable dependencies on centralization, such as reliance on Push's operational capabilities, license maintenance, and even the regulatory agencies' attitudes toward stablecoin issuance. A deeper challenge lies in the fact that Aave's users and governance token holders do not have equal governance rights over Push's operations, which may lead to decisions made by the compliant subsidiary in the real financial system diverging from the long-term interests of the DAO. In other words, in the pursuit of legality and scalability, Aave must also bear the potential risks of governance power erosion and decreased transparency—realities that the DeFi community is most reluctant to face but cannot escape.
Although the license grants legitimacy to compliant operations, the challenges Aave faces are equally severe. First, the market competition pressure for GHO cannot be underestimated. Globally, stablecoins like USDC, USDT, and DAI have already established widely used scenarios and brand recognition, and GHO needs to quickly build a user base and persuade institutional and individual users to accept it as a medium for payments and settlements.
Moreover, while MiCAR provides a clear regulatory framework for its operations in Europe, the rapid development of stablecoins and cross-border payments may lead to changes in regulations worldwide, forcing Aave to continuously adjust its compliance model, increasing operational costs and strategic uncertainties. At the same time, the decentralized nature of the protocol may conflict with Push's compliance requirements; for example, if regulatory demands require KYC/AML checks on users, it could impact user experience and spark controversy within the DeFi community. Furthermore, the credit and market volatility of the GHO stablecoin will also test commercial trust, as its value stability relies on collateral assets and risk management systems, and in large-scale usage scenarios, liquidity management, market volatility response, and cross-border payment security are directly related to Aave's reputation and operational stability.
Strategic Extension: The Trend of DeFi Compliance
Aave's MiCAR strategy is not only a corporate action but also a microcosm of the entire DeFi industry. As on-chain protocols expand into real financial markets, compliance is becoming an inevitable trend. DeFi is no longer limited to on-chain asset lending; it must confront challenges related to fiat channels, stablecoin payments, cross-border settlements, and compliance systems. This means that future DeFi projects will need not only technological innovation but also financial compliance capabilities and cross-border operational abilities. The arrival of regulatory frameworks also forces the industry to rethink the boundaries of "decentralization": which parts must remain transparent and permissionless, and which parts must accept regulation and auditing within a compliance framework.
Aave's approach also demonstrates a new strategic direction: obtaining regulatory licenses through the subsidiary Push, separating the management of compliance boundaries from the decentralized characteristics of the protocol. This not only allows Aave to enter the mainstream financial system without disrupting governance mechanisms but also provides a realistic and feasible roadmap for DeFi projects. In the future, more protocols may adopt a similar "dual-track structure," where the protocol layer maintains the technical and governance advantages of decentralization, while the operational layer connects with banks, payment institutions, and regulatory bodies through compliant entities, thereby truly achieving the integration and scalable development of on-chain finance with the real world.
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