The Ethereum Foundation (EF) has made a significant move into decentralized finance (DeFi) by borrowing $2 million in GHO stablecoins on the Aave protocol, using wrapped ETH (wETH) as collateral. This tactical step allows the EF to unlock liquidity without having to sell its ETH holdings, reflecting a new treasury management strategy focused on sustainability and DeFi engagement.
Marc Zeller, founder of the Aavechan Initiative, revealed the transaction, emphasizing that the approach aligns with Aave's value proposition of enabling ETH holders to maintain their positions while accessing funds. Stani Kulechov, founder of Aave, described the action as a "full DeFi circle," noting the Foundation is both supplying ETH to Aave and borrowing from it, showcasing DeFi's complete utility.
This borrowing move follows EF's previous larger allocations, where it deployed approximately 50,000 ETH across DeFi platforms like Aave, MakerDAO’s Spark, and Compound earlier in the year. By shifting from outright ETH sales to borrowing stablecoins, the EF addresses prior criticisms from the community regarding operational funding methods.
GHO, Aave’s native overcollateralized stablecoin, governed by the Aave DAO, currently has a circulating supply of $249 million and plays a key role in active lending metrics that correlate with Aave’s revenue generation capacity. The community broadly supports this new approach as a prudent management of ETH assets ensuring liquidity without liquidation.