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Aave Community Now Ventures Into High-Yield Real-World Assets

August 22, 2023 - Around 2 mins mins to read

Key Points:

  • The Ave community proposes real-world asset investment for growth.
  • Aave eyes lucrative returns with strategic investment.
  • Centrifuge partnership to develop the ecosystem’s market know-how
The Aave community is gearing up for a significant proposal, the “Treasury Proposal for RWA Allocation,” which will be open for temperature check voting until August 25.
Aave Community Now Ventures Into High-Yield Real-World Assets

The crux of this proposal is to allocate a portion of the stablecoins held by the treasury towards low-risk real-world asset (RWA) investments through Centrifuge Prime.

The intended outcomes are manifold: generating a yield on idle stablecoins, building a sturdy RWA infrastructure for the protocol’s long-term growth, and fostering internal expertise within the DAO for this particular market.

The proposal outlines Aave‘s collaboration with Centrifuge Prime to establish the essential legal and technical groundwork for the Aave Finance Department’s RWA investments. The Ministry of Finance initially sought to invest 1 million USDC in short-term U.S. Treasury bonds.

This allocation is envisioned to gradually expand, with a target of reaching up to 20% of the stable currency holdings. Future expansion into other yields is also contemplated, contingent on approval by the governance.

The proposal highlights that around 65% of the Aave Ministry of Finance’s treasury bonds are held in USDC, or approximately $15 million.

However, the DAO has thus far overlooked the 5% interest available through risk-free overnight financing of U.S. treasury assets. A mere $5 million investment could yield an annual income of $250,000, indicating substantial untapped potential.

It also underlines the broader motive of this initiative. Aave’s historical commitment to RWA initiatives and the desire to diversify beyond crypto-native assets are prominent factors.

Furthermore, by venturing into these markets, the DAO aims to establish internal proficiency in RWAs. The proposal positions Centrifuge Prime as a suitable partner, given its tailored approach for DAOs, offering comprehensive infrastructure and access to an array of assets.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

AAVE

DAO

RWA

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.