Aave DAO and Trident launch $100M onchain fixed-yield loan

The Aave decentralized autonomous organization (DAO), in collaboration with Trident Digital, IntoTheBlock (ITB) and TokenLogic, has successfully deployed the first onchain fixed-yield loan.

According to a press release shared with Cointelegraph, the product, valued at $100 million, will offer a secure and balanced solution for lenders and borrowers.

In a Q&A with Cointelegraph, Anthony DeMartino, CEO of Trident Digital, explained that the new fixed-yield loan model will provide “certainty for both borrowers and lenders with fixed rates and terms.”

“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 explains that term debt access in the digital asset space has been a long-established challenge, resulting from the illiquidity and volatility of governance tokens used as collateral.

Traditional onchain bond structures often “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

According to the release, the Aave DAO implemented an instance of Aave v3 to support Ether (ETH)-correlated assets as part of a joint initiative.

The initiative involved collaborating with Lido DAO to promote Liquid Restaking Tokens (LRTs) on Mellow Finance’s Symbiotic restaking protocol.

This fixed-yield loan, facilitated by ITB’s non-custodial smart contract suite of institutional decentralized finance (DeFi) solutions, locks 33,000 ETH for three months.

This capital is then supplied to Aave v3, with lenders receiving aETH tokens for collateral.

Aave GHO stablecoin live

On July 2, Aave DAO’s member-controlled community voted to launch the GHO stablecoin on the Arbitrum network.

With plans to launch the stablecoin on other networks over time, the DAO voted to launch on Arbitrum first to take advantage of its low transaction costs and higher throughput.

The decision to launch GHO on other networks in phases was made based on risk management factors and security considerations.