Kraken, the crypto exchange owned by Payward, is in advanced talks to acquire a 15% stake in decentralized lending protocol Aave at a $385 million valuation, according to sources. The deal would see Kraken invest 35,000 ETH ($71 million) in exchange for 250,000 AAVE tokens and a 15% equity stake in Aave Group. The investment is part of Payward's strategy to build out its asset management arm ahead of a potential IPO. Aave is recovering from the KelpDAO exploit in April, which caused about $190-230 million in bad debt and over $8 billion in withdrawals, though Aave's own contracts remained secure. Kraken has been expanding through acquisitions, including the recent purchase of derivatives exchange Bitnomial.

Key facts

• Kraken to invest 35,000 ETH for 250,000 AAVE and 15% equity at $385M valuation.
• Deal part of Payward's pre-IPO strategy to expand asset management arm.
• Aave suffered $190-230M bad debt from KelpDAO exploit in April despite no hack on Aave.
• Exploit triggered $8B+ withdrawals, highlighting DeFi contagion risks.
• Kraken also acquired derivatives exchange Bitnomial for up to $550M in April.