Aave launches Horizon, an institutional RWA-backed stablecoin market

Aave Labs has launched Horizon, a new lending platform for institutions to borrow stablecoins against real-world assets. 

The platform was announced on Aug. 27, marking one of Aave’s (AAVE) largest steps toward bridging institutional finance and decentralized finamce.

Although tokenized RWAs have emerged as a link between blockchain technology and traditional assets, they have not yet been integrated into DeFi. Horizon changes this dynamic and establishes a more integrated and effective market by permitting qualified institutions to use RWAs as collateral for stablecoin loans directly.

Aave is bringing tokenized RWAs into DeFi

Institutions can now access liquidity without having to sell tokenized bonds or treasuries, and stablecoin lenders profit from new yield opportunities linked to institutional borrowers.

Based on Aave Protocol v3.3, Horizon was designed with compliance in mind, making sure it meets legal requirements while preserving non-custodial infrastructure.

Horizon’s framework supports two main groups. These include qualified investors who borrow stablecoins and provide RWA collateral, as well as stablecoin lenders who provide liquidity without requiring permissions.

While lenders deposit stablecoins like RLUSD, USD Coin (USDC) or GHO and receive yield in exchange, borrowers receive non-transferable aTokens that represent their collateralized positions.

Multiple collateral options and security

At launch, Horizon supports collateral from Superstate, Centrifuge, and Circle, with assets such as tokenized U.S. Treasury bills and AAA-rated collateralized loan obligations. The platform also integrates Chainlink’s NAVLink, ensuring accurate valuations of RWA collateral.

Risk oversight is being managed by Llama Risk and Chaos Labs, with additional institutional partners including Ripple, WisdomTree, Securitize, and VanEck.

With Horizon’s adoption of non-custodial architecture and transparent onchain governance, security is a top priority. Issuers are still in charge of compliance and whitelisting, making sure that access is still permitted when needed.

This model exposes DeFi lenders to institutional borrowers with a new risk profile while providing institutions with stablecoin liquidity without the need to liquidate tokenized assets.

According to estimates, RWAs present a trillion-dollar opportunity, putting Aave at the forefront of the integration of decentralized liquidity and traditional finance.