Kraken's parent company Payward is reportedly in talks to acquire a 15% stake in decentralized lending protocol Aave, offering 35,000 ether tokens in exchange for 250,000 AAVE tokens and common equity in Aave Group in a deal valued at approximately $71 million, according to three sources familiar with the matter who spoke to CoinDesk. The proposed transaction implies a $385 million valuation for Aave—a figure that Aave founder Stani Kulechov has publicly rejected as a steep discount, pointing to the protocol's $134 million in annualized revenue that flows entirely to the Aave DAO. The reported investment discussions come as Aave continues recovery from an April 2026 exploit linked to North Korea's Lazarus Group that left the protocol with an estimated $190 million to $230 million in bad debt and triggered over $8 billion in user withdrawals, though neither Kraken nor Aave has officially confirmed whether active negotiations are underway.
Kraken Proposes 15% Stake in Aave for $71 Million
The structure under discussion involves Payward transferring 35,000 ether tokens to Aave Group in exchange for 250,000 AAVE tokens and a 15% common equity stake. Three sources with knowledge of the matter confirmed the talks to CoinDesk. Both Kraken and Aave have declined to officially verify whether active negotiations are underway. Kraken is also exploring co-investment from additional partners to help finance the deal, according to the sources.
The dual-layer structure—crypto tokens plus equity—would give Kraken both governance-adjacent influence and direct financial exposure to Aave's revenue. The protocol currently generates $134 million in annualized revenue, with proceeds flowing entirely to the Aave DAO. For Payward, the deal fits into a broader pre-IPO diversification strategy. In April, the company acquired crypto derivatives exchange Bitnomial for up to $550 million, securing comprehensive US CFTC licenses covering brokerage, clearing, and exchange operations. A report from May indicated Payward was raising fresh capital at a $20 billion valuation. Sources describe the Aave investment as part of a deliberate build-out of Payward Asset Management, an arm intended to take a more active role in DeFi and diversified digital asset opportunities.
Kulechov Rejects $385 Million Valuation
Stani Kulechov, Aave's founder, publicly stated on X that there is "NO WAY" the protocol would accept a sale at such a significant discount. He pointed to the gap between the proposed $385 million figure and AAVE's fully diluted market capitalization. Kulechov highlighted that Aave generates $134 million annually, with all revenue channeled to decentralized governance rather than a centralized treasury.
Kulechov clarified that Aave Labs—the commercial entity that supports the protocol—might consider selling portions of its own AAVE token holdings to interested market participants. He drew a distinction between a stake in Aave Group and acquiring the protocol itself, and between selling tokens from an existing allocation versus issuing new equity at a discounted valuation. Kulechov recently confirmed that Aave Labs is developing Aavenomics 3.0, which would introduce an automated token buyback mechanism for AAVE.
KelpDAO Exploit Left Aave With $190 Million Bad Debt
In April 2026, cybercriminals linked to North Korea's Lazarus Group exploited KelpDAO's cross-chain bridge infrastructure, minting approximately $292 million in unbacked rsETH tokens. Those tokens were deposited as collateral on Aave, and real assets were borrowed against them. When the collateral became worthless, the protocol was left holding an estimated $190 million to $230 million in bad debt. Depositors withdrew over $8 billion from the lending protocol in the weeks that followed.
Aave's own smart contracts were never compromised—the vulnerability existed entirely within KelpDAO's infrastructure. Since the crisis, Aave implemented a comprehensive risk management overhaul and deployed the fourth iteration of its protocol. Kulechov advanced his "Aave Will Win" initiative in April 2026, restructuring revenue distribution to more directly benefit the Aave DAO and token stakeholders.
Deal Remains Unconfirmed
Neither Kraken nor Aave has officially confirmed whether negotiations are actively underway. Kraken's spokesperson declined to comment, and Aave did not respond to requests for comment before publication. The valuation gap between Kraken's proposed $385 million and Kulechov's public rejection remains unresolved.
FAQ
What is Kraken proposing in its investment in Aave?
Kraken is reportedly in talks to acquire a 15% ownership stake in Aave, with Payward transferring 35,000 ether tokens in exchange for 250,000 AAVE tokens and a 15% common equity stake in Aave Group. The total deal is valued at approximately $71 million, with Aave valued at $385 million in the transaction.
Why did Aave founder Stani Kulechov reject the proposed deal valuation?
Kulechov stated publicly on X that there is "NO WAY" Aave would accept the $385 million valuation, which he described as a steep discount. He pointed to Aave's $134 million in annualized revenue that flows directly to the Aave DAO as evidence that the proposed valuation falls short of the protocol's fundamentals.
What security incident affected Aave in April 2026?
In April 2026, attackers linked to North Korea's Lazarus Group exploited KelpDAO's cross-chain bridge to create approximately $292 million in fraudulent rsETH tokens, which were used as collateral on Aave to borrow real assets. Aave's own smart contracts were not compromised, but the protocol was left with an estimated $190 million to $230 million in bad debt and saw over $8 billion in user withdrawals.
