Institutional DeFi New Era: Aave Launches Horizon, Can Institutions Collateralize Tokenized Assets to Borrow Stablecoins?

Lending giant Aave Labs announced the launch of the Horizon platform, targeting the institutional market, allowing them to use tokenization of U.S. Treasuries, funds, and other real-world assets (RWA) as collateral to borrow stablecoins such as USDC, RLUSD, and GHO. This initiative not only truly integrates RWA into the Decentralized Finance ecosystem but also liberates the all-weather liquidity of non-liquid assets under a compliance framework.

The Intersection of Institutions and DeFi: Horizon Liberates Tokenized Asset Liquidity

In the past few years, the scale of tokenized assets has rapidly expanded, with a current market value exceeding 26 billion USD, but most remain locked in traditional finance or isolated blockchain infrastructures, failing to truly realize liquidity benefits. Aave Labs addresses this with Horizon, allowing tokenized assets held by institutions to be directly converted into liquid capital.

The first application provided by Horizon allows qualified institutions to use tokenized U.S. Treasury bonds or assets such as funds as collateral to borrow stablecoins including Circle's USDC, Ripple's RLUSD, and Aave's own GHO. This not only provides flexibility for short-term financing but also enables institutions to deploy yield strategies, enhancing asset utilization efficiency.

Aave Strategy: Combining Compliance and DeFi Openness

The announcement pointed out that Horizon is built on the current largest lending protocol Aave V3, and the platform adopts a dual-layer architecture. At the collateral level, the token itself will embed the issuer's compliance checks to ensure that only institutions that meet regulatory standards can participate. At the lending market level, it remains open and composable to ensure that the flexibility and innovative space of DeFi are not weakened.

This design allows Horizon to meet regulatory requirements while satisfying the liquidity demands of the DeFi ecosystem, providing a compliant, secure, and efficient lending environment for institutional-grade capital. Aave founder Stani Kulechov emphasized: "Horizon provides the infrastructure and stablecoin liquidity that enables institutions to truly go on-chain, enjoying a transparent and highly efficient market 24/7."

In terms of cybersecurity and technology, Horizon collaborates with Chainlink and Chaos Labs to bring the real-time valuation of funds and bonds on-chain through net asset data (Onchain NAV), proof of reserves (PoR), and asset management transparency tools (SmartAUM). This provides verifiability of the underlying asset portfolio and reserves, demonstrating traditional financial-level auditing and risk management capabilities.

The collaboration lineup is magnificent, bringing together traditional asset management giants.

Looking at the collaboration lineup of Horizon, it can be said to be extensive, covering Ant Group, Ripple, Ethena, OpenEden, Securitize, and WisdomTree, among others. The specific supported assets include:

Superstate: Short-term US Treasury Fund (USTB), Crypto Arbitrage Fund (USCC)

Circle: Hashnote International Short-Term Income Fund (USYC)

Centrifuge: tokenized funds such as JAAA, JTRSY

VanEck: VBILL tokenization of US Treasury bonds

These collaborations showcase the partnership between traditional financial asset management companies and emerging DeFi protocols, allowing Aave to expand from a crypto-native application into a cross-market financial backbone.

Looking Ahead to the Horizon: The Path of Integration between RWA and Decentralized Finance

The launch of Horizon signifies that Aave is extending its reach into the realm of institutional-grade finance and the tokenization of real assets. In the future, Horizon will incorporate more private market and regulated financial products, making it a major entry point for institutions into DeFi, which can be considered quite a milestone.

However, let's look at the high standards attitude of S&P Global regarding the credit rating report for the lending protocol Sky Protocol ( before Maker). If DeFi protocols want to truly connect with traditional finance, then compliance and security must be prioritized. At this time, if there are potential chain risks associated with some high-leverage collateral in the lending pool, then institutions may still refuse to engage.

(Aave incorporates tETH as collateral: Will leverage over-leveraging push Aave to the brink of bad debt?)

This article Institutional DeFi New Era: Aave launches Horizon, can institutions also mortgage tokenized assets to borrow stablecoins? First appeared on Chain News ABMedia.