Aave Labs has rolled out a new initiative called Horizon, which aims to develop products that target the institutional adoption of decentralized finance through real-world asset (RWA) products, such as tokenized securities. According to Aave Labs, the goal is to bridge the gap between traditional finance and DeFi, leveraging the Aave ecosystem as a foundation.
Horizon’s first product will be a structured real-world asset solution that allows institutions to use tokenized money market funds as collateral to access stablecoin liquidity — with Aave’s stablecoin GHO serving as a primary liquidity source. The firm expects to generate new revenue streams for the Aave DAO and strengthen the utility of GHO in DeFi, it said. “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,” said Stani Kulechov, founder of Aave Labs.
A key feature of the Horizon initiative is the support for permissioned RWAs as collateral, which addresses institutional needs for compliance and risk management in accessing DeFi. Horizon comes in addition to past institutions-focused products from the team — like Aave Arc and Aave Pro. Horizon "goes beyond what earlier products offered," Aave said, explaining that it integrates real-world assets directly into the DeFi ecosystem.
While Aave Arc is a fully permissioned framework, Horizon introduces a hybrid model (permissioned issuer, permissionless liquidity). It supports permissioned RWA tokens (with asset-level controls) yet preserves permissionless access to stablecoin liquidity — especially via the Aave-native GHO stablecoin. This blend aims to meet both institutional compliance needs and the inherent benefits of DeFi’s open architecture, according to Aave.
Tokenized securities — which represent ownership of real-world assets like stocks, bonds, or funds on a blockchain — have seen major advancements recently. This sector relies on the notion that tokenized financial products, ranging from individual equities to onchain hedge funds, will improve liquidity, transparency, and efficiency in financial markets. Hence, the niche has pulled in large players in traditional finance like Blackrock and Franklin Templeton.
Aiming to bridge DeFi and traditional finance
Issued tokenized public securities have reached nearly $2.5 billion in market value. Despite the promise of tokenized assets, structural gaps exist due to DeFi’s open architecture not fully aligning with institutional requirements, Aave Labs said.
Horizon is set to launch as a licensed instance of the Aave protocol (initially using Aave V3 and transitioning to a custom Aave V4). This structure is designed specifically for the institutional RWA market.
Its deployment as a licensed instance of the Aave protocol means it will have its own configuration and operational parameters to serve the institutional RWA market. This separation allows Horizon to tailor risk management, compliance, and liquidity strategies specifically for its target use cases while still being aligned with the overall Aave DAO framework.
Aave Labs, part of Avara, developed the largest decentralized lending protocol, Aave. It also created GHO, a decentralized, overcollateralized Aave-native stablecoin pegged 1:1 to the US dollar.