Institutions Can Now Tokenize Real-World Assets to Unlock DeFi Liquidity

Aave Labs has introduced Horizon, a new platform designed to enable institutional borrowers to access stablecoins by using tokenized real-world assets (RWAs) as collateral. The initiative, launched to address the growing tokenized asset market, aims to provide qualified investors with a streamlined method to generate short-term liquidity from their RWA holdings and deploy yield strategies more effectively. Horizon builds upon Aave V3, the largest decentralized lending protocol with over $66 billion in assets, as reported by DefiLlama.

Institutions can now borrow stablecoins such as Circle’s USDC , Ripple’s RLUSD, and Aave’s GHO by pledging collateralized assets. These include tokenized U.S. Treasury and crypto carry funds from Superstate, Circle’s yield fund, and Centrifuge’s tokenized Janus Henderson products. This approach allows for 24/7 on-chain access and provides greater transparency, aligning with the operational needs of institutional clients.

The platform operates on a hybrid model, integrating permissioned and permissionless features. Issuer-level compliance checks are embedded within the collateral tokens, while the lending pools remain open and composable, preserving the core principles of decentralized finance. This dual structure ensures regulatory compliance does not compromise the flexibility and composability that define DeFi protocols.

Horizon leverages Chainlink’s oracle services to provide real-time pricing data, starting with NAVLink, which delivers on-chain net asset values for tokenized funds. This functionality ensures that all loans are adequately collateralized, reducing the risk of default and enhancing trust in the system. Aave Labs founder Stani Kulechov emphasized that the platform’s infrastructure supports the broader adoption of tokenized RWAs, unlocking deeper market efficiencies and operational transparency.

The tokenized RWA market has surpassed $26 billion, with Ethereum accounting for over 51% of the sector, according to RWA.xyz. Among the largest vehicles in this space is BlackRock’s BUIDL fund, which focuses on U.S. Treasuries with nearly $2.4 billion in assets. Aave’s Horizon is positioned to further accelerate this growth by making tokenized assets more liquid and usable within DeFi ecosystems. The launch includes partnerships with a broad range of asset managers, tokenization providers, and stablecoin issuers, including Centrifuge, Superstate, Circle , RLUSD, VanEck, Hamilton Lane , and WisdomTree .

Despite the potential for expansion, the integration of RWA tokens into DeFi lending markets is still in its early stages, with practical use cases limited. However, Horizon represents a significant step toward bridging traditional finance and DeFi. By transforming tokenized assets into functional collateral for stablecoin loans, Aave Labs is addressing the operational challenges that have hindered broader adoption of RWAs in decentralized financial systems.

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[4] Aave Labs launches stablecoin lending platform Horizon