Aave News Today: Institutions Tap Aave-Blockdaemon Pact to Unlock $70B in Secure DeFi Yields

Aave and Blockdaemon have announced a strategic partnership aimed at expanding institutional access to decentralized finance (DeFi) markets, marking a significant step toward mainstream adoption of blockchain-based financial services. The collaboration, unveiled on October 9, 2025, integrates Aave's lending protocol with Blockdaemon's Earn Stack platform, enabling institutional clients to leverage staking rewards and idle balances for yield generation in DeFi marketsAave & Blockdaemon: Unlocking DeFi for Institutions^[1]. This partnership is expected to unlock over $70 billion in on-chain liquidity, positioning Aave as the exclusive primary lending provider for Blockdaemon's non-custodial infrastructureAave and Blockdaemon partner to advance institutional access to DeFi^[2].

Under the integration, institutions can now deploy assets across Bitcoin, Ethereum, and stablecoins through Aave Vaults while retaining full custody of their funds. Blockdaemon's Earn Stack, which supports staking across more than 50 protocols, allows clients to channel rewards into Aave's lending pools for additional passive income. This approach addresses a key concern for institutional investors-security-by eliminating the need to transfer assets to third-party custodians. The partnership also emphasizes Aave's robust risk controls and operational resilience, which align with the stringent requirements of institutional-grade infrastructureAave and Blockdaemon partner to advance institutional access to DeFi^[2].

A critical component of the collaboration is the integration of tokenized real-world assets (RWAs) via Horizon, an institutional market launched in August 2025. Horizon has already attracted $200 million in total value locked (TVL), with over $54 million in borrows facilitated by users supplying stablecoins and tokenized assets such as Superstate's USTB and Janus Henderson's JTRSY. Institutions can use these assets as collateral to borrow stablecoins like USDC, RLUSD, or GHO, creating a dynamic cycle of liquidity and yield generation. This expansion into RWAs underscores the growing convergence between traditional finance and DeFi, offering institutions diversified exposure to both digital and physical assets.

The partnership's focus on non-custodial solutions aligns with broader trends in institutional DeFi adoption. Blockdaemon's infrastructure enables clients to interact with Aave's markets without compromising compliance or asset control, a critical factor for large investors navigating regulatory scrutiny. By leveraging Aave's modular architecture, the integration streamlines access to multi-chain liquidity, allowing institutions to optimize capital efficiency across protocols. This is particularly relevant as DeFi markets mature, with Aave commanding nearly 48% of the lending sector's TVL and cumulative borrow volumes exceeding $775 billion.

The collaboration also highlights the role of stablecoins in institutional DeFi strategies. Assets like USDC, GHO, and RLUSD serve as foundational instruments for borrowing and lending, providing stability amid crypto's inherent volatility. Aave's native stablecoin, GHO, has already achieved a market capitalization of $312 million, further solidifying the protocol's ecosystem. For institutions, this integration offers a pathway to generate yields on stablecoin balances while mitigating risks associated with price fluctuations.

Analysts note that the partnership could accelerate the adoption of DeFi among traditional financial players. By addressing barriers such as custody concerns and liquidity fragmentation, Aave and Blockdaemon are creating a bridge between legacy systems and decentralized markets. The integration's focus on institutional-grade infrastructure-combined with Aave's established reputation for security and scalability-positions the partnership to attract further capital inflows, particularly as DeFi protocols continue to refine their risk management frameworksAave & Blockdaemon: Unlocking DeFi for Institutions^[1].