Aave targets institutions and $19bn real-world asset market with new ‘Horizon’ initiative

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GM, Tim here.

DeFi is at a dead end.

There’s only a finite number of degens willing to take on the risks of trading onchain and grappling with clunky wallet interfaces, something the ecosystem’s stalling growth attests to.

In response, Coinbase has forged a deal with DeFi lender Morpho to let its customers access Bitcoin loans without having to so much as touch a non-custodial wallet.

Aave, the biggest DeFi lending protocol with $28 billion of deposits, is looking not to retail investors but to financial institutions to boost its growth.

On Thursday, founder Stani Kulechov announced Horizon, a new initiative designed to get more institutions using Aave.

Introducing Project Horizon—our new initiative at Aave Labs focused on building institutional DeFi products. pic.twitter.com/97BAAyvwZ0
— Stani.eth (@StaniKulechov) March 13, 2025

Through Horizon, Aave will adapt its existing products for institutional use cases — and for use with tokenised versions of real-world assets, like US Treasury bonds or stocks — Kulechov said in an X post.

Real-world assets in DeFi are booming. The sector hit an all-time high of almost $19 billion in March as asset manager BlackRock’s tokenised treasury fund blew past $1 billion in deposits.

BlackRock’s BUIDL fund blows past $1bn as tokenised treasury sector hits record high

A year after its launch, investors have poured more than $1...A year after its launch, investors have poured more than $1 billion into BlackRock’s tokenised treasury fund, BUIDL.

It’s not the first time Aave has attempted to court institutions, though.

In 2022, Aave launched Aave Arc, a version of the lending protocol designed to meet the needs of institutional players like fintech firms, hedge funds, and family offices.

A year later, Aave Arc fizzled out after drawing in a meagre $8 million in deposits.

The Horizon initiative may do better.

Compared to 2022, crypto benefits from a much friendlier regulatory environment under the Trump administration.

Additionally, Wall Street firms are more accepting of DeFi than they were three years ago — firms like BlackRock, State Street and Franklin Templeton are diving into the sector.

Finally, there’s Aave’s proven track record. Back in 2022, DeFi protocols were suffering code exploits on a fairly regular basis. Aave rival Euler suffered a catastrophic $197 million hack in 2023.

Aave’s code has been live for years now with no major vulnerabilities detected, something that should instil confidence in any DeFi-curious institutions.

As the biggest DeFi protocol not just on Ethereum, but in the entire DeFi ecosystem, whether or not Aave can successfully bring in institutional capital could be a bellwether for other protocols trying a similar tack.