Aave Announces 'Horizon,' a DeFi Platform for Institutions

# Aave Unveils 'Horizon' Initiative to Develop Institutional DeFi Products Decentralized finance (DeFi) protocol Aave has announced a new initiative, 'Horizon', aimed at developing DeFi products specifically for institutions. Aave Founder Stani Kulechov revealed the plan via a post on X (formerly Twitter), stating that Horizon will elevate DeFi to a new level. Kulechov emphasized the necessity of integrating Real-World Assets (RWA) into DeFi to attract institutional participation on-chain. Horizon plans to achieve this by developing products for institutions utilizing Aave's technology stack. According to an official announcement from Aave Labs, Horizon's first product will offer tokenized money market funds (MMFs) as collateral for institutions borrowing stablecoins like USDC and GHO on-chain. Aave Labs stated, "Horizon provides a scalable and accessible path that aligns with institutional standards while preserving the core efficiencies of DeFi." # Addressing the Growth of RWA and Structural Gaps in DeFi Kulechov explained that Horizon was inspired by the growth in the RWA sector over recent years, noting that on-chain U.S. Treasuries alone have accumulated approximately $4 billion in Total Value Locked (TVL). However, Aave Labs pointed out that the open structure of DeFi still falls short of meeting institutional requirements, resulting in structural gaps. Horizon aims to address these gaps by building institution-focused solutions. Some users have questioned the need for a new protocol, given that Aave Arc already serves institutional clients. Kulechov responded by clarifying that while Horizon provides permissionless liquidity and authorized collateral, Arc offers permitted liquidity and collateral. He also noted that Horizon builds upon lessons learned from Arc. # Licensing Proposal to Aave DAO and Revenue Sharing Plans Aave Labs has submitted a proposal to Aave DAO to license an Aave instance for the Horizon platform. Kulechov explained that this licensed instance would serve as the foundation for all projects under the Horizon initiative. According to the proposal, Horizon's RWA products will launch using an Aave V3 instance, with plans to transition to the latest version, Aave V4. Key features of the Horizon protocol include permissionless USDC and GHO stablecoin lending, integration of approved RWA ERC-20 tokens, and asset-level authority management for RWA issuers. Aave DAO will receive 50% of the licensing revenue in the first year, which will gradually decrease over three years to 10% by the fourth year. Additionally, if Horizon issues tokens, Aave DAO will receive a 15% allocation. # Community Concerns and Opposition to the Proposal Following the Horizon announcement, the community expressed both positive reactions and concerns, particularly regarding the potential dilution of AAVE tokens' value due to the new token issuance plans. One user, Gregrwalsh, argued, "The rationale for new token issuance that dilutes Aave tokens is unclear," suggesting that if new tokens are necessary, they should be allocated on a 1:1 basis with Aave tokens. Several community members, including Marc Zeller, founder of the Aave Chan Initiative (ACI), also voiced opposition to the proposal. Zeller reiterated that ACI would not support the proposal in its current form, emphasizing that AAVE should remain the ecosystem's sole token. Amid strong opposition to the Horizon proposal, it appears unlikely to pass unless Aave Labs makes significant changes to key details.