Ethereum Foundation embraces DeFi borrowing $2M in stablecoins on Aave using ETH collateral

The Ethereum Foundation (EF) has quietly taken a tactical step into DeFi by borrowing $2 million in GHO stablecoins using wrapped ETH (wETH) as collateral on the Aave protocol.

Marc Zeller, founder of the Aavechan Initiative, shared the development on May 29, noting that the Foundation’s use of GHO aligns with Aave’s core value proposition, enabling ETH holders to unlock liquidity without exiting their positions.

He said:

“They didn’t have to sell a single ETH to fund their objectives. Aave is designed for holders with conviction.”

Stani Kulechov, founder of Aave Protocol, echoed this sentiment. He highlighted that the EF is supplying ETH and borrowing on Aave, calling it a demonstration of DeFi’s complete utility cycle.

The Ethereum Foundation has not officially commented on the transaction as of press time.

However, the crypto community has broadly supported the strategy, viewing it as a prudent approach to treasury management and long-term sustainability.

Maksym Blazhkun, the co-founder of WeNode, said:

“Borrowing without selling — that’s DeFi conviction in action. Ethereum Foundation playing it smart with Aave.”

According to DeFillama data, Aave is Ethereum’s dominant DeFi lending protocol, with over $43 billion in total value locked (TVL). GHO is Aave’s native overcollateralized stablecoin and currently has a circulating supply of $249 million.

AAVE’s Growth (Source: Token Terminal)

According to blockchain analytics firm Token Terminal, active lending and GHO issuance are critical metrics that correlate directly with Aave DAO’s ability to generate revenue.

Ethereum Foundation’s revamp

Meanwhile, this loan move follows EF’s recent efforts to reshape its treasury strategy after extended community complaints.

Earlier this year, the Foundation deployed 50,000 ETH across multiple DeFi platforms. That included a February deposit of 30,800 ETH into Aave, split between its core market and Aave Prime. Additional allocations included 10,000 ETH to MakerDAO’s Spark and 4,200 ETH to Compound.

The borrowing reflects a strategic shift away from liquidating ETH to finance operations. Instead, EF is now tapping into DeFi lending to maintain its holdings while generating yield.

This approach also distances the Foundation from the criticism it faced in January, when it sold 300 ETH worth nearly $1 million.

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