Aave Labs has rolled out a new initiative called Horizon, which aims to develop products that target the institutional adoption of decentralized finance through real-world asset (RWA) products, such as tokenized securities. According to Aave Labs, the goal is to bridge the gap between traditional finance and DeFi, leveraging the Aave ecosystem as a foundation.
Horizon’s first product will be a structured real-world asset solution that allows institutions to use tokenized money market funds as collateral to access stablecoin liquidity — with Aave’s stablecoin GHO serving as a primary liquidity source. The firm expects to generate new revenue streams for the Aave DAO and strengthen the utility of GHO in DeFi, it said. “To unlock unprecedented liquidity and accelerate this transformation, Horizon will create products to bridge TradFi and DeFi, with GHO as the essential liquidity source and the Aave ecosystem as its foundation,” said Stani Kulechov, founder of Aave Labs.
A key feature of the Horizon initiative is the support for permissioned RWAs as collateral, which addresses institutional needs for compliance and risk management in accessing DeFi. Horizon comes in addition to past institutions-focused products from the team — like Aave Arc and Aave Pro.
Tokenized securities — which represent ownership of real-world assets like stocks, bonds, or funds on a blockchain — have seen major advancements recently. This sector relies on the notion that tokenized financial products, ranging from individual equities to onchain hedge funds, will improve liquidity, transparency, and efficiency in financial markets. Hence, the niche has pulled in large players in traditional finance.
For example, BlackRock — the world’s largest asset manager — launched the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) on Ethereum in March 2024. BUIDL is a tokenized money market fund that aims to maintain a stable value of $1 per token, supported by cash and U.S. Treasury bills. Franklin Templeton also operates a similar tokenized money market fund.
Issued tokenized public securities have reached nearly $2.5 billion in market value. Despite the promise of tokenized assets, structural gaps exist due to DeFi’s open architecture not fully aligning with institutional requirements, Aave Labs said. Horizon aims to provide solutions specifically designed to meet these needs, the firm added.
Aave Labs, part of Avara, developed the largest decentralized lending protocol, Aave. It also created GHO, a decentralized, overcollateralized Aave-native stablecoin pegged 1:1 to the US dollar.
