The Ethereum Foundation has drawn criticism for financing its daily activities through the sale of ETH. With a $2 million loan obtained via Aave, decentralized finance borrowing might now be considered as a substitute for those previous token sales.
The Ethereum Foundation has stepped deeper into decentralized finance. Aave’s founder recently disclosed on X that the foundation borrowed $2 million in GHO stablecoin through the decentralized lending platform.
Stani Kulechov stated that the Ethereum Foundation actively uses Aave not only to supply ETH but also to borrow it, calling the setup a clear example of ‘the full DeFi circle.’
The Ethereum Foundation used its previously deposited ETH on Aave as collateral to open a 2,000,000 GHO loan, according to Etherscan data. The current value of this loan stands at approximately $55 million.
At the time of reporting, the GHO tokens remain in the Ethereum Foundation’s wallet. However, the funds are intended for operational use, according to Claudia Ceniceros, Avara’s Chief of Communications, who informed The Defiant.
The Aave decentralized autonomous organization (DAO) actively manages GHO, a decentralized stablecoin that generates yield and relies on excess collateral for backing. This DAO is responsible for determining interest rates and maintaining collateral standards.
Harnessing the Power of DeFi
On February 13, the Ethereum Foundation (EF) disclosed that it deployed a total of 45,000 ETH—worth around $120 million at the time—into three decentralized finance (DeFi) protocols: Aave, Spark, and Compound. EF allocated the majority of the funds to Aave, placing 10,000 ETH in Aave Prime and 20,800 ETH in Aave Core.
At that moment, the Ethereum Foundation announced that it was actively exploring staking and evaluating various other decentralized finance (DeFi) opportunities.
The Ethereum Foundation did not respond to a request for comment.
Cease Asset Liquidation
The Ethereum Foundation has come under criticism for its periodic sales of ETH to support daily operations. Critics argue that leveraging its holdings to earn yield could serve as a more efficient method of funding its activities.
Ethereum developer Eric Conner voiced disapproval of the foundation’s practice of liquidating ETH, remarking in January that staking ETH and utilizing DeFi could potentially cover a substantial portion, if not the entirety, of its internal expenditures.
Vitalik Buterin addressed the matter by highlighting two primary concerns. The initial issue, according to him, was related to regulatory challenges—a concern that he noted has been gradually diminishing, likely due to the more favorable stance toward crypto regulation adopted by the current U.S. administration.
The second point raised was that staking directly by the Ethereum Foundation would, in effect, compel it to take a side in any potential controversial hard fork. However, the Foundation also mentioned that it is actively exploring methods to mitigate this risk.
By venturing into DeFi lending, the Ethereum Foundation seems to be initiating efforts to reduce its reliance on selling ETH to support operations.
