The Aave DAO (decentralized autonomous organization) has effectively deployed the first onchain fixed-yield loan in partnership with Trident Digital, IntoTheBlock (ITB), and TokenLogic.
Cointelegraph received a press release stating that the $100 million product will provide borrowers and lenders a secure and equitable solution.
The new fixed-yield loan model will offer “certainty for both borrowers and lenders with fixed rates and terms,” according to Anthony DeMartino, CEO of Trident Digital, in a Q&A with Cointelegraph.
“In a market with many unknowns, having clarity around the trade length and rate reduces unpredictability and market volatility, offering a more stable investment option.”
Traditional challenge mitigation
The press release states that the illiquidity and volatility of governance tokens used as collateral have long been a long-standing challenge for accessing term debt in the digital asset space.
Traditional onchain bond structures frequently “favored borrowers, leaving lenders exposed to significant risks without the potential for commensurate rewards.”
“In response to these challenges, Trident Digital, in collaboration with IntoTheBlock and TokenLogic, has developed a pioneering fixed yield loan where interest payments are directly tied to the protocol’s revenue.”
Aave v3 Liquidity support
The release indicates that the Aave DAO has implemented an instance of Aave v3 to facilitate Ether-correlated assets as part of a collaborative initiative.
The initiative entailed a partnership with Lido DAO to promote Liquid Restaking Tokens (LRTs) on Mellow Finance’s Symbiotic restaking protocol.
ITB’s non-custodial smart contract suite of institutional decentralized finance (DeFi) solutions facilitates this fixed-yield loan, which secures 33,000 ETH for three months.
Lenders receive aETH tokens as collateral following the provision of this capital to Aave v3.
GHO stablecoin is live
Aave DAO’s member-controlled community voted on July 2 to establish the GHO stablecoin on the Arbitrum network.
The DAO voted to launch the stablecoin on Arbitrum first to capitalize on its superior throughput and minimal transaction costs and launch it on other networks.
Risk management factors and security considerations were the rationale behind deploying GHO on other networks in phases.
