Aave Labs Founder Confirms No New Token Will Be Issued for Horizon, Aave’s RWA Project

Aave Labs founder Stani Kulechov confirmed on March 16 that the Aave DAO has decided against creating a new token for Horizon, Aave’s project aimed at integrating real-world assets (RWAs) into decentralized finance (DeFi). This decision comes after a clear consensus within the community that introducing a new token could potentially weaken the value of the existing AAVE token, which plays a central role in governance and utility within the Aave ecosystem.

Horizon, which was initially announced on March 13, aims to bridge DeFi and institutional finance by enabling tokenized money market funds to be used as collateral for stablecoin loans. The proposal also outlined a revenue-sharing model and a possible 15% allocation of the token to the Aave DAO. However, concerns arose among prominent developers and community members about the risks of issuing a new token, particularly regarding its impact on AAVE’s value.

In response, Kulechov emphasized that Aave Labs would respect the DAO’s decision and move forward with Horizon without introducing a new token. He further reiterated that the Aave DAO is a decentralized organization, where governance decisions are made collectively by the community.

The Horizon project, which aims to meet institutional standards while maintaining the efficiency and transparency of DeFi, is still in development. However, its future remains uncertain without the addition of a new token. The RWA market, which Horizon aims to tap into, has been rapidly growing. On-chain RWA values recently rose 19% in one month to $18.63 billion, with the value of on-chain treasuries alone increasing by 400% over the past year to $4.26 billion.

This growth in RWAs aligns with significant investments from major institutions such as BlackRock. BlackRock’s tokenized U.S. Treasury fund, BUIDL, surpassed $1 billion in March 2023. Analysts believe the RWA market could reach $16 trillion within the next decade, marking it as a significant force in global finance.