Institutions Borrow Stablecoins Against Tokenized Assets, Bridging DeFi and Traditional Finance

Aave Horizon, a new lending market developed by Aave Labs, has officially launched on Ethereum , enabling qualified institutional investors to borrow stablecoins against tokenized real-world assets (RWAs). This initiative aims to integrate RWAs into decentralized finance (DeFi) by unlocking liquidity without requiring the sale or redemption of the underlying assets. The platform supports collateral from tokenized U.S. Treasury bills, AAA-rated collateralized loan obligations (CLOs), and other high-quality real-world instruments, with launch partners including Superstate, Centrifuge, and Circle.

Horizon operates as non-custodial infrastructure, where smart contracts facilitate the borrowing and lending process without the need for order books or centralized matching. Qualified investors must meet specific compliance requirements set by the RWA issuers to deposit collateral and obtain stablecoin loans. The system issues non-transferable aTokens as representations of the collateral position, with loan-to-value (LTV) parameters varying by collateral type.

For stablecoin lenders, Horizon provides a permissionless avenue to supply assets such as GHO, RLUSD, and USDC to earn yield from institutional borrowers. This dynamic creates a bridge between DeFi and traditional financial instruments, offering new risk profiles and yield opportunities within the decentralized ecosystem. The initial launch includes collateral options from Superstate, Centrifuge, and Circle, with additional assets expected to be added over time.

To support the compliance and transparency of the platform, Chainlink SmartData is being used to deliver real-time net asset values (NAVs) for tokenized assets via the NAVLink product. This integration ensures that stablecoin loans remain appropriately overcollateralized within a compliant DeFi framework. Aave Labs also plans to introduce additional tools such as Proof of Reserve and SmartAUM to further enhance risk management capabilities.

The tokenized RWA market has grown to $26.6 billion, with Ethereum hosting over 51% of the sector. This growth underscores the increasing institutional interest in tokenized assets, with major players like BlackRock , Tether, and Paxos leading the charge. The tokenization of traditional assets is enabling more efficient capital deployment, daily dividend payouts, and faster settlement times—features that are particularly appealing to institutional investors.

Aave’s Horizon is designed to tap into this rapidly expanding market by providing infrastructure that meets the compliance and liquidity needs of institutional participants. By combining permissioned features for collateral management with permissionless access for stablecoin suppliers, the platform facilitates seamless integration between RWAs and DeFi. This approach is expected to drive further adoption of tokenized assets, with potential applications in private credit, equities, and alternative investments.

Security remains a central focus of the platform, with protective measures including deterministic smart contract execution, non-transferable aTokens, and limited administrative powers. Issuers retain control over whitelisting, KYC, and asset management, ensuring that regulatory requirements are met at every stage of the process. Aave Labs also emphasizes transparency, with all privileged actions recorded on-chain and governed under standard operating procedures.