- Aave lent the Ethereum Foundation $2 million in GHO by taking ETH as collateral instead of forcing them to sell their Ethereum.
- This move signals that crypto firms are now relying on long-term debt instead of selling ETH during unstable market periods.
- The change helps the Ethereum Foundation partner more effectively with DeFi platforms and strengthens its aid to Aave.
The Ethereum Foundation has borrowed a sum worth $2 million in GHO stablecoins from the Aave lending protocol. The Federation chose to use wrapped ETH as backing and not sell its ETH to get money for operations, as it had done in the past.
Over the years, the Foundation acquired grants and organized internal events by selling its ETH aftermarket peaks. Criticism of this practice was strong during market downturns.
Marc Zeller, founder of Aave Chan Initiative, posted the transaction to the social media platform X. He made clear that the Ethereum Foundation could meet its finances without having to sell any ETH. He praised the achievement as proof that Aave can support people with significant amounts of Ethereum who want liquidity but do not want to sell their holdings.
DeFi activity is increasing as more people choose to borrow.
The Foundation has engaged with DeFi lending platforms before now. Diving into DeFi, it used 45,000 ETH, worth around $120 million, to work with Aave, Compound, and Spark in February. Most of the funds were allocated to Aave, confirming its place in the Foundation’s Decentralized Finance strategy.
Stani Kulechov, founder of Aave, described the latest borrowing as a full-circle moment. He noted that the Foundation is not only supplying ETH to Aave but is now also borrowing from it. This dual role illustrates the increasing integration between Ethereum’s core stakeholders and DeFi platforms built on its network.
Market performance supports Foundation’s shift
ETH reached $2,780 earlier in the day, the highest price since February 24, despite a broader market decline. Although it later dropped to $2,600, Ethereum has posted a 45 percent gain over the past month, significantly reducing its year-to-date losses.
As of the end of 2024, the Ethereum Foundation holds approximately 240,000 ETH. Historical data suggests that it has sold between 130,000 and 160,000 ETH to date. The move to borrow stablecoins while retaining ETH indicates a strategic effort to align funding methods with long-term asset management goals.
