Aave's Horizon market has officially surpassed $520 million in deposits, cementing its position as the largest and most rapidly expanding venue for loans backed by real-world assets (RWAs).

What Are RWAs and Why Tokenization Matters?

Real-world assets (RWAs) refer to tangible or financial assets from the off-chain world—think bonds, invoices, commodities, or property—converted into blockchain tokens for easier trading, fractional ownership, and use in DeFi protocols. Tokenization enhances liquidity, reduces intermediaries, and enables 24/7 global access.

The broader RWA tokenization market has exploded in 2025, reaching between $24 billion and $30 billion in size, up from around $5 billion in 2022, a growth of over 6x. Projections estimate it could hit $3.5 trillion to $30 trillion by 2030, driven by institutional adoption from players like BlackRock and JPMorgan. Horizon's growth mirrors this trend, with tokenized U.S. Treasuries alone surging to $4 billion in market cap over two years.

The Aave's platform, which operates on Ethereum, caters to institutional and qualified investors, enabling them to collateralize tokenized RWAs such as credit to borrow stablecoins. This model creates a crucial bridge between traditional finance and the decentralized ecosystem, providing institutional-grade yield opportunities for DeFi users who supply stablecoin liquidity.

How Horizon Works: A Step-by-Step Breakdown

Horizon is built on Aave V3 and is permissioned for RWAs, meaning issuers (e.g., funds or institutions) onboard qualified users who can then supply tokenized assets as collateral.

Onboarding and Tokenization: An RWA issuer (like a credit fund) tokenizes an asset and permissions qualified borrowers.Supplying Collateral: Borrowers deposit the tokenized RWA into Horizon pools.Borrowing Stablecoins: They borrow against it (e.g., up to 70-80% loan-to-value ratio, depending on the asset).Liquidity Provision and Yields: DeFi users supply stablecoins to the pools, earning yields from borrow interest.

The swift expansion of the Horizon market indicates a growing institutional appetite for leveraging on-chain infrastructure for financing. This development is a key signal of the broader tokenization trend, where static, off-chain assets are being transformed into productive capital within the DeFi landscape.