[Temp Check] Building Horizon’s RWA Product: An Aave Licensed Instance for Institutions

[sreno]

If Horizon is a Aave DAO initiative, then value accrual should accrete to Aave DAO and Aave token, not a new token with a measly 15% allocation to Aave DAO.

Aave DAO should retain full control and ownership over the Horizon initiative.

Fragmenting Aave with a permission restricted product, Horizon, is already bad, let alone having this new product be strategically independent, while still relying heavily on Aave backend.

Unfortunately the structure of this proposal reeks of VC influence. Why else would Aave DAO relinquish control over a new potentially lucrative product? Diluting AAVE token with a new token which has 85% of its supply unallocated is a non starter.

[Peanut]

I would like to understand why a new token is needed. Why can the DAO not simply govern the new Horizon product?

[dfinocchiaro]

Putting forth such an incredibly egregious temp check proposal is disheartening. I echo all of the negative sentiments that have been shared. I want to take it a step further to suggest that the team making this proposal has made me strongly consider my long term holding of the AAVE token.

The thought of creating a new token to [Screw] AAVE holders is irresponsible and infuriating. The revenue sharing is the same irresponsible approach. Really done in bad taste, and again, makes me question holding the AAVE token.

In the end, this RWA initiative should be under the AAVE umbrella, and benefit AAVE alone. There is no need for dilution, no need for games, JUST AAVE.

I see the “Just use AAVE” slogan constantly posted on X and I love it, it makes me smile. But this proposal, is dreadfully misguided and it shouldn’t be negotiated for better terms.
– JUST USE AAVE

[nasim]

i just made an account to say that as part of Aave community from the the day one who even participated in Lend ICO i believe that you are basically empowering the new token that is not in the hand of your community if this DAO is really DAO and most of voting power is not in the hand of insiders ( unfortunately i don’t believe that’s the case) then it should vote for what is in the favor of their true community. i see this proposal really irresponsible , if this new product need new token for branding or changing in contract purpose then it should be distributed 1:1 to Aave holders i think that’s pretty obvious and logical!

[Tor_GAINS]

Honestly, even a 1:1 swap would be a disaster. This blatant gap between the AAVE Labs proposal and the DAO/community’s best interests is infuriating

As ACI pointed out, the AAVE ecosystem has one token and it’s $AAVE. And that should never change.

Every effort from this DAO and its participants should be focused on AAVE. Period.

Launching a new token is completely unjustifiable. If AAVE Labs needs funding, they should request a budget from the DAO, not create a new token.

My first reply was a bit more “friendly” but to be 100% honest, this proposal feels like a stab in the back.

Fortunately, AAVE is one of the most resilient DAOs in the world and it’s great to see how united the community against this proposal.

[A_J]

No reasoning given as to why launch a new toke when AAVE exists.

0% confidence in this proposal.

[0xmonk]

I’m totally against creating a new token. I see the community sentiment as the same.

If a token is a must must, then buy AAVE from the market for equivalent of FDV, burn it permanently to mint new token and distribute 100% of it to AAVE stakers so everybody including @AaveLabs , AAVE DAO gets their fair share of the token.

Sorry folks, no free internet money today.

I believe my delegate @ACI will vote against it.

[Peanut]

I will say, after giving this a bit more thought, what Aave Labs is proposing makes sense. There are are few points I will agree with, namely in the Motivation rationale:

The Institutional Adoption Gap in RWAs

Tokenization is fundamentally reshaping financial infrastructure. We believe all assets will eventually be onchain, harnessing DeFi as a more resilient financial system.

I agree here. I also believe that Aave’s pools should take center stage for this new world.

However, DeFi’s open architecture lacks the compliance, governance, and risk management frameworks required for institutional adoption. Without tailored solutions, participation remains limited, and integrating RWAs at scale remains a challenge.

I agree here. However, @AaveLabs some elaboration is needed here. What frameworks and tailored solutions are you referring to?

I think this temp check has a few, significant unanswered questions. Specifically, I’m curious about:

The Aave DAO and its service providers will oversee the Horizon’s RWA product’s operational functionality.

What does this mean in the context of Horizon? To some, this can read as “keep the lights on for us and you get a small piece of the pie”. I think this needs clarification, as the profit sharing section is difficult to contextualize otherwise.

Personally, I’m excited that Aave can play a role in the inevitable RWA future. I want to ensure that the DAO doesn’t assume too much risk, or if it does, is adequately compensated.

[lukewasm]

Strongly disagree with a new token launch and rev share which is clearly detrimental to AAVE value accrual. Glad that the community all show up against it.

[knew]

1. I totally agree don’t launch a new token, please take a look at the MakerDao upgrade to sky.money, launch a new token “sky”, then the mkr price go down, and has been falling
2. It make investor confuse with aave
3. It harm all the aave community, the MakerDao community was hit hard by the upgrade with new token, after the community was harm, its market share was also affected and began to decline
4. Aave faces severe competition, if stAave holder leave the community while aave price go down for a long time, the supply market while go down due to the community safety

[sasa1999]

As a long-term holder of AAVE, I think this proposal is a bad look for the AAVE ecosystem. Why would you launch a new token when you already have AAVE for governance?
If this proposal goes through i will sell my entire stack of AAVE.

[zzzzz]

I have already dumped all my AAVE holdings, and even if this proposal gets shot down in the future, the sheer audacity of Aave Labs to even suggest such a travesty is beyond comprehension—it’s an outright betrayal. This isn’t just reckless; it’s a shameless, predatory move that screams their intent to fleece the community for their own greedy gains. Trust is utterly shattered, and the long-term value of AAVE is being torched in front of our eyes. I implore every member of this community to wake up, see through this disgraceful charade, and fight back against a team that seems hell-bent on destroying everything we’ve built together!

[EzR3aL]

No matter what you think about this proposal, which is still only a TEMP CHECK, please be nice and respectful. Aave Labs has done great things in the past and I’m sure they will do so in the future as well, even with this proposal.

[0xmonk]

Are we just distracted with a “probable” new tokens and focusing only there?

[Tor_GAINS]

I mean… it’s right there in black and white haha

Mentioning a new token kills the entire proposal, no matter the terms

[ApuMallku]

Agreed, but at the same time, I understand why everyone is getting so emotional—it feels like an attempted robbery. How can we just give away for “free” what will be the most important product of the future? Tokenization and RWAs have the potential to elevate AAVE to an entirely new level.

Aave Labs has essentially been “Gauntleted,” which is why the community is so triggered. If there’s a revenue share, it should be 90% for AAVE DAO and 10% for the service provider. If they don’t like it, we should open the door to other service providers. I personally know many TradFi professionals who would love to work on this venture.

I’m glad to see that ACI is fully aligned with the community’s sentiment.

[sid_areta]

There’s been a lot of discussion already about this initiative and most of it has revolved around 2 key aspects of the proposal: the proposed new token and the profit share with the Aave DAO.

Before we discuss those, it’s important to note that we’re fully in favour of the direction of this proposal. Bringing RWAs onto Aave is something we’ve always advocated for, and it’s the key step in changing the financial rails of the world to one enabled by DeFi. Aave is probably in the best position to be the market leader going forward and bringing the financial world onto blockchain rails. We’re keen to dive into the details, especially the GHO Facilitator with RWA collateral, and we believe that allowing qualified users to borrow using RWAs as collateral has the potential to take Aave TVL to heights that we’ve never seen before. We’re confident that Horizon is the best step forward in that regard.

On the token: As echoed many times in this thread, we’re not sure whether this is the best idea. Many AAVE holders themselves have clearly communicated that it’s not value accretive for the AAVE token, it will fragment liquidity and dilute existing holders, and is not a positive signal when Aave is currently riding high and consolidating its position as industry leader. Should institutions require a token or incentives to deposit, then locked AAVE, stkAAVE, or a similar mechanism could be an option.

On the profit share: This is pretty straightforward. As @EzR3aL has already pointed out, we already have a framework for forks and licensing. The profit share should always be 20% to the DAO. This benefits both Aave Labs and the DAO, as it should - Aave Labs is going to be putting in a ton of effort to iron out the legal and regulatory components, entity set-up, negotiating with institutions, etc., and should receive 80% of the profits. We think this is a fair set-up for all.

TL;DR: We’re fully in favour of the direction Horizon is going in and if the above two points are tackled, we’re fully in support.

[EzR3aL]

The DAO would not give anything away for free. There is a clear and approved framework the DAO has and projects like WorldLiberty Finance are already following/approved.

I do think its fair for Avara/Aave Labs to generate revenue from Horizon, but I do as well think its possible without the need to create a new token but rather use Umbrella and a straight forward initiative to onboard institution on big scale.

[MrKris]

I’ve had an opportunity to review all the comments as well as read the proposal detail and have a couple of suggestions that @AaveLabs may want to consider moving forward.

Based on the community’s feedback, an alternative approach is proposed to balance Aave Labs’ vision for institutional RWA adoption with the DAO’s desire for control, fairness, and value accrual to AAVE holders.

Integrate Horizon Fully Under Aave DAO:

Horizon should operate as a direct extension of the Aave Protocol, not a separate licensed instance with strategic independence. This ensures all value accrues to AAVE and maintains the DAO’s permissionless ethos, adapted for institutional needs through permissioned RWA features.

No New Token:

Abandon the idea of a Horizon-specific token. Instead, use AAVE as the sole governance and value-accrual token. If funding is required, Aave Labs can submit a budget proposal to the DAO, potentially funded through AAVE treasury reserves or GHO issuance, subject to community vote.

Enhanced Profit-Sharing Model:

Implement a profit-sharing structure that prioritizes Aave DAO:

• Year 1: 80% to Aave DAO, 20% to Aave Labs (or service provider).
• Year 2: 75% to Aave DAO, 25% to Aave Labs.
• Year 3+: 70% to Aave DAO, 30% to Aave Labs.
  This reflects Aave DAO’s critical role in providing infrastructure, brand, and liquidity while incentivizing Aave Labs to develop and manage Horizon effectively.

Compliance and Risk Management Frameworks:

Aave Labs should collaborate with the DAO to define clear compliance and governance frameworks (e.g., KYC/AML for institutional users, audited smart contracts for RWAs). These can be integrated into Aave V3/V4 via a modular “permissioned pool” feature, allowing institutional access without fragmenting the protocol.
Establish a DAO subcommittee or hire external experts (funded by the treasury) to oversee regulatory coordination, reducing risk to the broader ecosystem.

Boost GHO Adoption:

Retain Horizon’s focus on GHO as a primary borrowing asset to drive its adoption and stability. Allocate a portion of Horizon’s revenue (e.g., 10% of Aave DAO’s share) to a GHO liquidity fund, enhancing its utility and reinforcing its role in DeFi.

Community Oversight and Transparency:

Launch a revised Temp Check with detailed specifications on operational oversight, risk parameters, and legal structures. Ensure Aave DAO retains veto power over Horizon’s asset configurations and network expansions.

Competitive Development Option:

If Aave Labs insists on a new token or low profit share, open Horizon’s development to competitive bids from other service providers this ensures the DAO secures the best terms, leveraging community suggestions that Defi/TradFi professionals are eager to participate.

My Rationale as a Aave holder

This alternative aligns with the community’s demand for “Just Use AAVE” by keeping Horizon within the Aave ecosystem, avoiding dilution, and ensuring AAVE holders benefit from RWA growth.

I hope It acknowledges Aave Labs’ motivation for institutional adoption and the technical complexity of RWAs, offering them a fair (but reduced) revenue share to incentivize development.

We all recognise the strategic importance of RWA’s and the importance of this move—provided it strengthens, not undermines, Aave DAO.

Full disclosure I’m neither a lawyer, Defi guru, coding wizard or business expert just a simple Aave token holder so really don’t know if what I’m proposing is feasible but what I do know is what has been proposed is NOT feasible in its current format.

BTW I strongly suspect if this Temp Check were actually shared with existing service providers first we wouldn’t be having this conversation……

[Kene_StableLab]

The general idea for this product is commendable, but the primary issue with this proposal is its specifics.

1. The AAVE Ecosystem does not need a new token; this would result in a clear case for dilution; everything should be tied back to the AAVE token. This proposal does not make a strong case for why this new token must exist.
2. The revenue sharing split does not make sense; I propose gradually increasing the profit given to the Aave DAO over time instead of decreasing it, considering how reliant this proposed product will be on Aave’s technology and contributors.
3. This proposal fails to address the regulatory concerns that may arise from this instance’s operations; dealing with Institutions will require additional legal responsibility, which may put the Aave DAO in a position to be scrutinized by regulators.

Overall, we believe that there is a version of this proposal that can be valuable to the Aave DAO, but currently, we will not be supporting this TEMP CHECK,