Blockchain Giants Team Up to Rewrite Rules of Institutional Lending

Aave Labs has launched Horizon, a platform designed to enable institutional borrowers to utilize tokenized real-world assets (RWAs) as collateral for stablecoin loans. This development builds on Aave’s protocol, which already holds over $40 billion in total value locked (TVL), and is intended to operate continuously while integrating compliance with on-chain liquidity. The platform supports borrowing stablecoins using traditional assets, such as U.S. Treasuries, institutional funds, crypto-focused funds, and AAA-rated CLOs. This innovation allows institutions to utilize idle liquidity in faster, more efficient systems than those traditionally available [1].

Horizon is built using Chainlink SmartData and features tools such as Onchain NAV for real-time tracking of tokenized asset values [1]. The platform is also expected to incorporate additional tools like Proof of Reserve and SmartAUM for enhanced risk management. Aave Labs founder Stani Kulechov emphasized that Horizon is developed to accommodate the “growth of tokenized real-world collateral.” The launch features a network of partners, including Centrifuge, Superstate, Circle, RLUSD, VanEck, Hamilton Lane, and WisdomTree, which underscores the potential of this platform to significantly impact the tokenization market [1].

The tokenized RWA market has reached $26.6 billion, with Ethereum accounting for more than 51% of this sector [1]. Notable vehicles within this market include BlackRock’s BUIDL fund, which focuses on U.S. Treasuries and holds nearly $2.4 billion in assets, followed by Tether’s and Paxos’ tokenized gold, valued at $1.26 billion and over $945 million, respectively. The sector's growth is considered a strong indicator of its potential, especially as most other crypto sectors struggle with losses [1]. Kevin Rusher, founder of RWA lending platform RAAC, noted that the tokenized RWA sector surpassing the $20 billion milestone earlier this year was a “strong signal.”

Aave’s rebranding of its institutional product from Arc to Horizon aims to enhance its tokenization niche and provide a ripe opportunity for stablecoin providers [2]. The first cohort of companies includes Circle, VanEck, and WisdomTree. Stani Kulechov stated that the Arc project was paused after the 2022 FTX collapse due to reduced institutional interest but has since been refined and reimagined as Horizon. Aave is currently the largest DeFi protocol by TVL, according to DefiLlama [2].

The tokenized asset market has seen significant adoption, with more than $26 billion circulating in tokenized versions of stocks, bonds, commodities, and private credit [2]. BlackRock, an asset manager with a $12 trillion portfolio, issued a tokenized money market fund in 2024, which has grown to over $2 billion. In April, Ripple and Boston Consulting Group predicted the tokenization niche would reach $19 trillion by 2033. However, such projections are viewed with skepticism by some, with Deutsche Bank’s Sabih Behzad questioning their feasibility [2]. Centrifuge CEO, Bhaji Illuminati, emphasized that the true potential of RWAs lies in what can be done once they are on-chain, not just in their tokenization.

Horizon’s launch is part of a broader trend where institutions seek to leverage blockchain technology to enhance their operations and expand their market reach. Superstate, Ant Digital Technologies, Ethena, KAIO, OpenEden, Securitize, Hamilton Lane, and Chainlink are all participating in the venture [2]. After passing through standard KYC compliance rules via each issuer, investors will be able to borrow three stablecoins in a customized version of Aave: Circle’s USDC, Ripple’s RLUSD, and Aave’s own GHO token. Kulechov expressed interest in expanding the types of collateral to include private equity, noting that tokenizing entities like SpaceX or Stripe could provide unique investment opportunities [2].

In summary, Aave’s Horizon platform is positioned to transform the institutional lending landscape by enabling the use of tokenized RWAs as collateral for stablecoin loans. This initiative aligns with the broader trend of asset tokenization, which has gained significant traction in 2025. As the market continues to evolve and regulatory frameworks become more established, platforms like Horizon are expected to play a pivotal role in shaping the future of institutional finance and DeFi.

Source:

[1] Aave Labs Launches Horizon, Enabling Institutions to Borrow Stablecoins Against RWAs (https://thedefiant.io/news/defi/aave-labs-launches-horizon-enabling-institutions-to-borrow-stablecoins-against-rwas)

[2] Aave attracts tokenisation titans in revival of institutional product (https://www.dlnews.com/articles/defi/aave-relaunches-institutional-platform-to-borrow-stablecoins/)