Aave aims to unlock up to $25 billion in RWA with Horizon: the move that could change banking liquidity

Aave Labs launches Horizon, an infrastructure that connects tokenized real-world assets (RWA) to on-chain credit flows. According to The Block, the goal is to use regulated collateral to obtain loans in stablecoin, unlocking up to $25 billion of value that is currently underutilized in traditional circuits.

This estimate is consistent with market analyses reporting a total value of tokenized RWAs close to $24 billion by June 2025, with a growth nearly five times compared to 2022 according to our in-depth analysis. It should be noted that the focus is on an operational bridge between the regulated world and programmable finance.

According to data collected by RWA.xyz and analyses from our editorial team, institutional adoption of RWA products has increased, especially for short-term instruments and tokenized government funds; this explains why solutions like Horizon initially focus on Treasuries and short-duration funds. Market analysts also note that, if managed correctly, the integration between issuer-enforced compliance and stablecoin markets can reduce the marginal cost of funding for banks, improving settlement speed and visibility on collateral.

Aave: what is Horizon and what changes for regulated finance

Built on the Aave protocol, Horizon allows qualified counterparties to deposit tokenized RWAs – such as US Treasury securities or institutional fund shares – as collateral for credit lines in stablecoins. Essentially, it transforms “locked” assets in legacy systems into immediately deployable capital on‑chain, integrating compliance rules as required by KYC/AML regulations. An interesting aspect is the operational continuity: resources can be mobilized quickly without waiving supervisory requirements.

How it works in brief

• Onboarding: authorized entities pass KYC/AML checks and are enabled, meaning they are whitelisted by the RWA token issuer.
• Collateral Deposit: The tokenized RWA are allocated as collateral on the Horizon platform.
• Assessment: the net asset value (NAV) on-chain, updated in real-time thanks to oracles, reflects the price of the collateral.
• Loan: institutions can obtain stablecoins against collateral, with operations active 24/7.
• Risk management: if the NAV falls below predefined thresholds, automatic protection and liquidation procedures are triggered.

Who is Behind Horizon: Partners and Technological Stack

Horizon is born thanks to the collaboration with financial and technological partners that ensure tokenization, pricing, and compliance. Among these are Centrifuge, which handles the tokenization and lifecycle management of RWAs, and Superstate, specialized in the tokenization of institutional funds. 

Also important is the role of Circle in the issuance of stablecoin and the settlement infrastructure, as well as collaborations with asset managers like VanEck and Hamilton Lane. The security of financial data and the definition of on-chain NAV are guaranteed by the oracles of Chainlink. In this context, the technical stack covers the entire cycle: issuance, custody, data, and settlement.

Why it interests banks and managers

By linking regulated tokenization to high-liquidity stablecoin markets, Horizon allows institutions to reduce financing time and costs. In this way, banks and other regulated entities can access on‑chain capital while maintaining strict regulatory standards. This results in a potential optimization of liquidity with the same risk profile.

• Efficiency: operations 24/7, with instant settlements and complete traceability through native audit.
• Compliance: each transfer is bound to a whitelist and to the rights and restrictions imposed at the token level by the issuer.
• Transparency: data on collateral, rates, and risk thresholds are verifiable on‑chain.
• Interoperability: Horizon integrates with the main stablecoins and data infrastructures already present in the market.

Collateral allowed at launch

Among the first instruments accepted as collateral on Horizon are tokenized funds and securities. For example, the Superstate Short Duration U.S. Government Securities Fund (USTB) offers exposure to short-duration U.S. Treasuries in tokenized form, while the Centrifuge / Janus Henderson Anemoy Treasury Fund (JTRSY) represents a fund based on U.S. government securities designed for institutional on-chain use, as confirmed by Janus Henderson. It should be noted that the list may expand as issuance and custody processes mature.

The roadmap foresees the gradual extension of collateral to other asset classes, as tokenization and compliance processes evolve.

Evaluation and Risk: On-chain NAV and Oracles

Horizon integrates the NAV on‑chain provided by Chainlink, which publishes the net asset value of the funds directly on the blockchain. This system allows for an official and verifiable measure of the collateral value, updated at regular intervals thanks to data oracles. In practice, it reduces ambiguity in pricing and automates risk triggers.

Why it is crucial

• Reliable pricing: the system reduces the risk of erroneous or manipulable valuations.
• Automated management: the automatic enabling of thresholds, margin calls, and liquidations ensures transparency in the process.
• Compliance: simplifies auditing, reporting, and alignment with regulatory requirements.

Frictionless Compliance: Token Gating and Open Markets

Compliance is enforced at the token level by the issuer, with the so-called issuer-enforced compliance: only verified wallets can hold and transfer the RWAs. Simultaneously, financing occurs on permissionless stablecoin markets, combining institutional requirements and on-chain liquidity. In this balance, token gating coexists with the open trading of capital.

Market Potential: Unlocking $25 Billion in RWAs

As reported by The Block, a significant portion – up to $25 billion – of tokenized RWAs is currently underutilized. With Horizon, Aave Labs aims to unlock this liquidity, accelerating the circulation of real-world assets in an on-chain environment and opening new lines of financing for regulated entities. In perspective, the impact could also affect daily treasury management. 

Operating Parameters and Requirements (indicative)

• Eligible counterparties: qualified institutions, subject to KYC/AML verification, whitelisting, and contractual agreements.
• Guarantee factors: Loan-to-Value (LTV) ratios set conservatively and variable based on the risk profile of the collateral.
• Rates and fees: variable based on market conditions and protocol policies, with possible origination fees and custody costs.
• Liquidations: automated mechanisms based on on-chain NAV thresholds and availability on the secondary market.
• Hours: access and regulation of operations guaranteed 24/7, with programmable settlement options.

Critical Voices and Open Issues

• Jurisdiction and investor rights: greater clarity is needed on the competent forum and the treatment of tokens in the event of insolvency.
• Resilience of oracles: their operation depends on reliable data feeds, requiring protection mechanisms (circuit breaker) and redundant solutions.
• KYC/AML cross‑chain: interoperability between different networks and verification standards can present challenges, pending greater homogeneity.
• Total costs: between on-chain fees, custody, administration, and spread, the total cost of borrowing must be monitored carefully.
• IT Integration: Connecting to traditional treasury and banking systems and any necessary accounting adjustments require time and targeted investments.

Expected Impact on Bank Liquidity Management

The use of tokenized RWAs as collateral opens new channels for capital raising. Treasuries and funding desks will be able to obtain stablecoins against regulated assets, benefiting from reduced settlement times and real-time visibility on guarantees and covenants. Ultimately, greater flexibility in short-term funding is anticipated.

If institutional adoption continues to grow, Horizon could represent a stable bridge between traditional finance and on‑chain infrastructures. Secure scalability, supported by high technical standards, data quality, and regulatory clarity, will be crucial for the speed of adoption. In this context, regulatory evolution will play a significant role.

FAQ

Access restricted to qualified counterparties

The use of Horizon is reserved for institutional entities that pass rigorous compliance checks and adhere to the rules imposed by the issued tokens.

Operational Impact for Banks

Banks can transform traditional assets into on-chain collateral, obtaining liquidity in stablecoins while complying with regulatory requirements and ensuring auditability. An operational advantage is the ability to automate covenants and risk metrics.

Conclusion

Horizon by Aave Labs represents a concrete step towards a market where tokenized RWAs efficiently finance regulated entities, thanks to an integrated on-chain NAV system, open markets, and compliance. The future challenge will be to scale securely, leveraging high technical standards, data quality, and regulatory clarity to accelerate the adoption of this new financial infrastructure. Ultimately, much will depend on operational resilience and the alignment between policy and technology.