During a discussion led by Framework Ventures’ Adam Badrawi during Blockworks’ Digital Asset Summit in New York, Chainlink co-founder Sergey Nazarov sat down with Aave founder Stani Kulechov to discuss how Chainlink and Aave are driving DeFi’s institutional revolution and mainstream adoption.
Aave recently announced plans to launch a tokenized real-world asset (RWA) product, Horizon, that will allow institutions to use tokenized money market funds as collateral to borrow USDC and Aave’s algorithmic stablecoin, GHO, at scale.
Kulechov views stablecoins as a “prime example” of tokenized assets that pave the way for more real-world value to be represented onchain with better transparency and utility.
“The substrate of the actual execution environment is changing and that brings us assets such as treasury bills and money market funds that are coming onchain,” he said.
“I think the more time goes on and the more interest and expertise there is for tokenizing assets, we will see product offerings that are moving upwards on the risk curve as well.”
Since its inception, Aave has been secured by Chainlink, the standard for onchain finance which has enabled over $19 trillion in transaction value and powers GHO’s cross-chain expansion.
“From Chainlink’s partnership, what we’re excited about is to understand how we make these offchain assets more auditable and bring the trust of these assets onchain,” Kulechov said.
Nazarov, who recently addressed the President at the White House Crypto Summit, called the new crypto-friendly regulatory environment in the U.S. a “key unlock” for the blockchain industry.
As he recently explained on Bloomberg, Nazarov believes the U.S. should continue its global leadership role in web3 by issuing the most abundant and reliable tokenized RWAs and automating compliance so they can be adopted around the world.
“What’s most important is that the DeFi ecosystem can function in the U.S. financial system,” he said. “That is going to help DeFi grow to completely new heights.”
“I personally believe that at some point, with the help of tokenization, a lot of this value will be sitting in decentralized finance and will be accessible to global users,” Kulechov agreed.
“From the U.S.’s perspective, what’s interesting is that if this innovation of financial assets can be issued directly here, they can be represented onchain and distributed globally in the most transparent, efficient, and trusted way.”
Watch the full conversation.