Aave Labs Unveils Horizon to Bridge Institutional Capital and DeFi

Aave Labs has introduced Horizon, a new initiative designed to bridge the gap between decentralized finance (DeFi) and institutional capital.

As tokenization enhances liquidity, reduces costs, and enables 24/7 transactions, demand for real-world assets (RWAs) onchain has surged. Tokenized US Treasuries alone have grown 408% year-over-year, reaching $4 billion.

With institutional adoption growing, projections estimate up to $16 trillion in RWAs could move on-chain over the next decade, according to the Boston Consulting Group. To meet this demand, Horizon’s first product will let institutions use tokenized money market funds (MMFs) as collateral to borrow stablecoins like USDC and GHO.

"The era of tokenized real-world assets is here and will reshape global finance,” said Stani Kulechov, Founder Aave Labs. “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.”

Kulechov added that at Aave Labs, "we believe that in the future all assets will be onchain, and the Aave ecosystem will serve as the bedrock for a seamless, global financial system."

How it Works

Horizon’s RWA product will initially launch as a licensed instance of Aave V3. Once Aave V4 becomes available, Horizon will transition to a custom deployment.

To align with the Aave decentralized autonomous organization (DAO), Horizon will introduce a structured profit-sharing mechanism. In its first year, 50% of Horizon’s revenue will be allocated to the Aave DAO. In its second year, 30% will be allocated.

Additionally, if Horizon launches a token, 15% will be allocated to the Aave DAO, with 10% going to the DAO Treasury, 3% to Aave ecosystem incentives, and 2% airdropped to Staked Aave (stkAAVE) holders.

Key Design Components

The platform will feature permissioned RWA token supply and withdrawal mechanisms, with qualified institutional users allowed to borrow stablecoins like USDC and GHO.

A dedicated GHO facilitator will enable newly minted GHO on demand. Additionally, Horizon’s infrastructure will support permissioned liquidation workflows, preventing disruptions to on-chain markets. The platform will also integrate with RWA-allowlisted ERC-20 tokens.

Aave Labs outlined next steps as engaging with community members and service providers to refine the proposal. If consensus is reached on the initial TEMP proposal, it will advance to the Snapshot stage for a formal vote.

A successful Snapshot outcome will result in further shareholder input before moving to the Aave Request for Comments (ARFC) stage for final consideration.