Instantons on D-branes

We consider type IIA compactification on $K3$. We show that the instanton subsectors of the worldvolume of $N$ 4-branes wrapped around $K3$ lead to a Hagedorn density of BPS states in accord with heterotic-type IIA duality in 6 dimensions. We also find evidence that the correct framework to understand the results of Nakajima on the appearance of affine Kac-Moody algebras on the cohomology of moduli space of instantons on ALE spaces is in the context of heterotic-type IIA string duality.