The Ethereum Foundation has transferred $120 million worth of ETH to DeFi lending protocols, boosting the decentralized finance sector. The amount, equivalent to 45,000 ETH, was distributed across three platforms: Aave, Spark, and Compound.
Aave, a leading DeFi lending platform, received the lion’s share of the funds. The foundation allocated 30,800 ETH, valued at $81.6 million, as follows:
Deposited 20,800 ETH ($55 million) into the Aave main market.
Transferred 10,000 ETH ($26 million) to Aave Prime.
In addition to Aave, the Ethereum Foundation transferred 10,000 ETH ($26 million) to Spark, a MakerDAO-linked protocol that offers lending services similar to Aave. Compound, another established platform in the space, received 4,200 ETH, worth $11.2 million.
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Ethereum: Foundation's monetization strategy
The allocation of these assets not only boosts the DeFi ecosystem but also generates passive income for the foundation. Thus, with the current supply rate of 1.5% per year, it is estimated that this strategy could yield around $1.5 million annually.
This move can be interpreted as a way to increase the value of the Ethereum Foundation's treasury, avoiding the need to sell its assets directly on the market.
Last month, the Ethereum Foundation had already moved 50,000 ETH to a multisignature wallet to support DeFi protocols. The move came after criticism over its treasury management, leading to community discussions about leadership changes, including suggestions for replacing current executive director Aya Miyaguchi.
The decision to invest in Aave, Spark, and Compound reflects the foundation’s efforts to consolidate the DeFi sector and ensure financial sustainability for its future operations. The strategy could influence other organizations to adopt similar practices, further expanding the adoption of decentralized finance.
Furthermore, the strategy is a response from the Ethereum Foundation to recent criticism that the institution was selling its ETH instead of reinvesting in the ecosystem.