After resolving the controversy, Aave Labs launched the Ethereum RWA market Horizon.
Written by: ChandlerZ, Foresight News
On August 28, Aave Labs announced the official launch of the Ethereum RWA market Horizon. Institutions and qualified users can borrow stablecoins against RWA collateral, supporting Circle, Superstate, and Centrifuge collateral. Partnering institutions include Ant Financial, Chainlink, Ethena, KAIO, OpenEden, Ripple, Securitize, VanEck, and WisdomTree.
The project's proposal was first put forward in March, with the company stating that it hopes to create new revenue sources for Aave DAO and strengthen GHO's utility in DeFi.
The proposal page also shows that if a token is created, Aave DAO may receive a 15% allocation and revenue-sharing arrangement. However, many opposing users believe that the new token may dilute the value of the existing AAVE token, undermining AAVE's status as the sole governance and utility token. After a heated discussion, Aave founder Stani Kulechov ultimately stated that no new token will be created for the product Horizon proposed by Aave.
What is Horizon? Can it bring new growth to Aave?
What is Horizon?
According to Aave Labs' definition, Horizon is a lending market specifically designed for RWA. Institutional investors can collateralize tokenized U.S. government bonds, money market funds, and even AAA-rated loan debts, and then borrow stablecoins to maintain liquidity. Ordinary users can also participate without barriers by depositing stablecoins to earn interest.
Technically, Horizon is still built on Aave protocol v3.3, maintaining a non-custodial, automated architecture. Chainlink's NAVLink is responsible for providing the net asset value of the collateral, while Llama Risk and Chaos Labs conduct risk assessments. It sounds very institution-friendly, but it also retains the transparency and automated execution of DeFi.
Qualified investors meeting the requirements of RWA issuing institutions can deposit RWA as collateral on Horizon. Each issuing institution is responsible for setting its own requirements and managing access permissions for tokens.
When RWA token supply is in place, Horizon will issue a non-transferable aToken representing the collateral position. Users can borrow stablecoins equivalent to a certain percentage of the value of their collateral, with each type of collateral having its own set loan-to-value (LTV) parameters.
Providing stablecoins to Horizon requires no permission. Anyone can supply RLUSD, USDC, or GHO for lending to institutions. Users provide the stablecoins of their choice to the market and receive aTokens representing their deposits. aTokens can earn yields and can be withdrawn at any time.
Launch partners and assets
The project started with several partners, and at the launch of Horizon, it included RWA collateral options from Superstate (USTB and USCC) and Centrifuge (JRTSY and JAAA). Circle's USYC is also set to launch soon. Stablecoin lending institutions can provide GHO, RLUSD, and USDC.
Circle's USYC offers the opportunity to earn dollar returns by investing in a diversified portfolio of high-quality short-term U.S. Treasury bonds.
Superstate's USTB and USCC provide opportunities to earn returns through short-term U.S. government securities and cryptocurrency arbitrage strategies.
Centrifuge's JRTSY and JAAA provide opportunities to earn returns through tokenized investments in U.S. Treasury bills and AAA-rated mortgage debt.
Other institutions in the Horizon network include Ant Financial, Ethena, KAIO (formerly Libre), OpenEden, Securitize, VanEck, and WisdomTree.
Why is Aave doing this?
Over the past few years, Aave has been one of the leaders in DeFi lending, but a reality is that growth in the crypto-native market has hit a bottleneck. The lending volume of old friends like ETH, USDC, and DAI has stabilized, while long-tail assets are numerous but riskier and cannot support new growth.
Meanwhile, RWA has become a new trend in the industry. The scale of tokenized government bonds has multiplied several times in two years, with traditional giants like BlackRock and Franklin also trying their hand. Aave believes that there are currently over $25 billion in RWA assets on-chain, but most are spread across traditional infrastructure. Horizon allows these assets to be used as real-time collateral for stablecoin loans, thereby unlocking greater utility. For Aave, this is an opportunity that cannot be missed. If RWA can be brought in, it can not only attract new capital but also find a more solid use case for its stablecoin GHO.
When Aave first announced the Horizon plan in March, the intention was to bring RWA into DeFi and provide a compliant entry point for institutional collateral lending. However, one design involved in the proposal quickly sparked internal disputes within the DAO regarding whether to issue an entirely new token for Horizon.
According to the original concept, if Horizon launched an independent token, AaveDAO would receive about a 15% allocation and enjoy certain income-sharing rights. However, this plan was immediately met with a lot of opposition. Many community members were concerned that the new token would dilute the value of AAVE, undermining AAVE's status as the sole governance and utility token. Marc Zeller of Aave Chan Initiative publicly stated that he would not support such a proposal.
As discussions heated up, Aave founder Stani Kulechov personally stepped in to clarify in mid-March, stating clearly that no new token would be created for Horizon, and the development team would respect the DAO's consensus, stating, "The overall consensus is that the DAO is not interested in introducing a new token, and this consensus will be respected. AaveDAO is a real DAO." This statement relieved some community members, who saw it as a protection of AAVE's value and governance structure. The controversy over Horizon's tokenization finally came to an end.
The launch of Horizon means that Aave has moved from a crypto-native lending protocol to a more ambitious direction. Of course, challenges have not disappeared. Horizon is not the first attempt at RWA; it brings Aave into this gradually heating competition.
