Crypto exchange Kraken is in talks to acquire a 15% stake in DeFi protocol Aave, valuing the deal at $385 million, and plans to expand into DeFi asset management business.

According to people familiar with the matter, Payward, the parent company of crypto trading platform Kraken, is in talks with decentralized lending protocol Aave, proposing to exchange 35,000 Ether for 250,000 AAVE tokens plus a 15% ordinary stake in Aave Group. The deal carries an overall valuation of roughly $385 million, with a transaction value of around $71 million. The sources added that Kraken is also seeking co-financing for the transaction. This investment is positioned as the first in a series of deals for Payward’s asset management business, marking Kraken’s shift to a more active role in DeFi and other investment sectors. The sources noted that Payward has robust capital backing, and existing partners are interested in participating in such opportunities. Aave is currently the world’s largest decentralized lending protocol, but in April this year, it was embroiled in one of the most severe crises in DeFi history: hackers exploited a vulnerability in the KelpDAO cross-chain bridge to mint approximately $292 million in uncollateralized rsETH, which was then used as collateral to borrow real assets on Aave, leaving the protocol with bad debts of $190 million to $230 million. Though Aave’s own smart contracts were never compromised, the incident triggered the withdrawal of over $8 billion in deposits, underscoring the cascading risks of interconnectedness in the DeFi ecosystem. Kraken has been on an acquisition spree recently: earlier in April, it announced the acquisition of crypto derivatives exchange Bitnomial for up to $550 million, and is reportedly conducting a new round of financing at a $20 billion valuation, actively paving the way for a potential IPO.