Aave unveils horizon, merging real-world assets with DeFi

Aave Labs has launched a new initiative called Horizon, which aims to enhance the integration of institutional Real-World Assets (RWAs) into DeFi.

Announced on March 13, the project seeks to bridge DeFi’s open financial ecosystem with the structured needs of institutional asset issuers, creating a framework that encourages broader participation in on-chain finance.

Project Horizon

Project Horizon is designed to align with institutional compliance requirements while preserving DeFi’s efficiency and transparency. The initiative introduces a structured pathway for institutions and tokenization platforms to leverage decentralized finance securely.

One of its core features allows institutions to use tokenized money market funds (MMFs) as collateral when borrowing stablecoins like GHO and USDC. Future plans include expanding to other forms of RWAs and further enhancing institutional access to DeFi liquidity.

Aave Labs’ CEO, Stani Kulechov, highlighted that DeFi lacks the necessary infrastructure for large-scale institutional participation. He emphasized that Project Horizon builds upon lessons from Aave Arc, improving institutional access to permissionless stablecoin liquidity.

To support this initiative, Aave has proposed launching a licensed instance of the Aave Protocol through the Aave DAO.

This proposal will be the foundation for all projects under the Horizon initiative. Horizon’s RWA solution will initially operate under Aave V3 as a licensed instance, eventually transitioning to a custom Aave V4 deployment when available.

Horizon will implement a profit-sharing mechanism for long-term sustainability, allocating 50% of its first-year revenue to the Aave DAO. Additional incentives will also be introduced to drive further ecosystem adoption.

RWA growth

Aave Labs’ expansion into RWAs comes amid significant growth in the sector.

Data from RWA.xyz indicates that the total value of on-chain RWAs has surged 17.51% over the past month, reaching $18.13 billion. The number of unique asset holders has also climbed 5%, surpassing 89,818.

A key expansion area has been on-chain treasuries, which now account for a TVL of $4.22 billion, reflecting a 400% year-over-year increase. Analysts predict the RWA market could scale to $16 trillion over the next decade, highlighting its growing role in global finance.

Recognizing this trend, major institutions such as BlackRock have already issued substantial tokenized assets through its BUIDL product.

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