Horizon is a lending market specifically serving RWA.
Written by: ChandlerZ, Foresight News
On August 28, Aave Labs announced the official launch of the Ethereum RWA market, Horizon. Institutional and qualified users can borrow stablecoins by collateralizing RWA, supporting Circle, Superstate, and Centrifuge collateral. Partnering institutions include Ant Group, Chainlink, Ethena, KAIO, OpenEden, Ripple, Securitize, VanEck, and WisdomTree.
The proposal for the project was first raised in March, with the company stating that it aims to create new revenue streams for Aave DAO and enhance the utility of GHO in DeFi.
However, the proposal page also indicated that if a token were created, Aave DAO might receive a 15% allocation and revenue-sharing arrangement. Many opposing users believe that the new token could dilute the value of existing AAVE tokens, undermining AAVE's status as the sole governance and utility token. After a heated discussion, Aave founder Stani Kulechov ultimately stated that no new token would be created for the product Horizon proposed by Aave.
What is Horizon? Can it bring new growth to Aave?
What is Horizon?
According to Aave Labs, Horizon is a lending market specifically serving RWA. Institutional investors can collateralize tokenized U.S. Treasury bonds, money market funds, and even AAA-rated loan debt, then borrow stablecoins to maintain liquidity. Ordinary users can participate without barriers, depositing stablecoins to earn interest.
Technically, Horizon is built on Aave protocol v3.3, remaining a non-custodial, automated architecture. Chainlink's NAVLink is responsible for providing the net asset value of the collateral, while Llama Risk and Chaos Labs conduct risk assessments. It sounds very institutional-friendly but retains the transparency and automated execution of DeFi.
Qualified investors meeting the requirements of RWA issuers can deposit RWA as collateral on Horizon. Each issuing institution is responsible for setting its own requirements and managing access permissions for the tokens.
When the RWA token supply is in place, Horizon will issue a non-transferable aToken representing the collateral position. Users can borrow stablecoins equivalent to a certain percentage of the value of their collateral, with each type of collateral having its own set loan-to-value (LTV) parameters.
Providing stablecoins to Horizon requires no permission. Anyone can offer RLUSD, USDC, or GHO to institutions for lending. Users provide the stablecoins of their choice to the market and receive aToken representing their deposit. aTokens can earn yields and can be withdrawn at any time.
Launch Partners and Assets
From the outset, the project has attracted numerous partners. At launch, Horizon includes RWA collateral options from Superstate (USTB and USCC) and Centrifuge (JRTSY and JAAA). Circle's USYC is also set to launch soon. Stablecoin lending institutions can offer GHO, RLUSD, and USDC.
Circle's USYC provides an opportunity to earn dollar returns through a diversified portfolio of high-quality short-term U.S. Treasury bonds.
Superstate's USTB and USCC offer opportunities to earn returns through short-term U.S. government securities and cryptocurrency arbitrage strategies.
Centrifuge's JRTSY and JAAA provide opportunities to earn returns through tokenized investments in U.S. Treasury bills and AAA-rated mortgage debt.
Other institutions in the Horizon network include Ant Group, Ethena, KAIO (formerly Libre), OpenEden, Securitize, VanEck, and WisdomTree.
Why is Aave doing this?
In recent years, Aave has been one of the leaders in DeFi lending, but a reality is that the growth of the crypto-native market has hit a bottleneck. The lending volume of old friends like ETH, USDC, and DAI has stabilized, and while there are many long-tail assets, they carry higher risks and cannot support new growth.
Meanwhile, RWA has become a new trend in the industry. The scale of tokenized Treasury bonds has multiplied in two years, with traditional giants like BlackRock and Franklin entering the fray. Aave believes that there are currently over $25 billion in RWA assets on-chain, but most are scattered across traditional infrastructures. Horizon allows these assets to serve as real-time collateral for stablecoin loans, thereby releasing greater utility. For Aave, this is an opportunity that cannot be missed. If RWA can be brought in, it can not only attract new funds but also provide a more solid use case for its stablecoin GHO.
When Aave first announced the Horizon plan in March, the intention was to bring RWA into DeFi, providing a compliant entry for institutions to collateralize loans. However, a design involved in the proposal quickly sparked controversy within the DAO regarding whether to issue a new token for Horizon.
According to the initial concept, if Horizon launched an independent token, AaveDAO would receive about a 15% allocation and enjoy certain revenue-sharing rights. However, this proposal was immediately met with significant opposition. Many community members were concerned that the new token would dilute the value of AAVE, undermining AAVE's status as the sole governance and utility token. Marc Zeller from the Aave Chan Initiative publicly stated that he would not support such a proposal.
As discussions heated up, Aave founder Stani Kulechov personally stepped in mid-March to clarify, explicitly stating that no new token would be created for Horizon, and the development team would respect the DAO's consensus, stating, "The overall consensus is that the DAO is not interested in introducing a new token, and this consensus will be respected. AaveDAO is a true DAO." This statement relieved some community members, who viewed it as a protection of AAVE's value and governance system. The controversy over the tokenization of Horizon ultimately came to a close.
The launch of Horizon signifies that Aave has moved from a crypto-native lending protocol to a more ambitious direction. Of course, challenges remain. Horizon is not the first attempt at RWA; it places Aave in the midst of this gradually heating competition.
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