The Ethereum Foundation (EF) has recently made a strategic move into the world of decentralized finance (DeFi) by borrowing $2 million in GHO stablecoins using wrapped ETH (wETH) as collateral on the Aave protocol. This development was shared by Marc Zeller, founder of the Aavechan Initiative, on May 29. Zeller highlighted that the Foundation’s use of GHO aligns with Aave’s core value proposition, allowing ETH holders to access liquidity without having to sell their assets.
Stani Kulechov, the founder of Aave Protocol, echoed Zeller’s sentiment, emphasizing the significance of the EF supplying ETH and borrowing on Aave as a demonstration of DeFi’s complete utility cycle. While the Ethereum Foundation has not officially commented on the transaction, the crypto community has shown widespread support for this strategic move, viewing it as a smart approach to treasury management and long-term sustainability.
One community member, Maksym Blazhkun, the co-founder of WeNode, commended the Foundation’s decision to borrow without selling, describing it as “DeFi conviction in action.” Aave is currently Ethereum’s dominant DeFi lending protocol, with over $43 billion in total value locked (TVL). GHO, Aave’s native overcollateralized stablecoin, boasts a circulating supply of $249 million, according to DeFillama data.
The loan move by the Ethereum Foundation comes on the heels of the organization’s recent efforts to revamp its treasury strategy following community feedback. Earlier this year, the Foundation allocated 50,000 ETH across various DeFi platforms, including a significant deposit into Aave. This strategic shift signifies a move away from liquidating ETH to finance operations, opting instead to leverage DeFi lending to maintain holdings and generate yield.
This new approach also serves to distance the Foundation from previous criticism it faced in January when it sold a substantial amount of ETH. By embracing DeFi lending, the Ethereum Foundation is not only enhancing its treasury management practices but also positioning itself for long-term financial sustainability in the ever-evolving crypto landscape.