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 seems to be expanding its involvement in decentralized finance, with a recent disclosure on X by Aave’s founder revealing that a $2 million loan in GHO stablecoin was just taken by the foundation through the decentralized lending platform.
Stani Kulechov noted that Aave is being utilized by the Ethereum Foundation not just for supplying ETH but also for borrowing purposes, describing the situation as a representation of “the full DeFi circle.”
According to Etherscan data, a 2,000,000 GHO loan was opened by the Ethereum Foundation using its previously deposited ETH on Aave as collateral—an amount currently valued 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.
GHO operates as a decentralized stablecoin that generates yield, is backed by excess collateral, and is managed by the Aave decentralized autonomous organization (DAO). This DAO is responsible for determining interest rates and maintaining collateral standards.
Harnessing the Power of DeFi
On February 13, it was disclosed by the Ethereum Foundation (EF) that a total of 45,000 ETH—valued at approximately $120 million at the time—had been deployed into three decentralized finance (DeFi) protocols: Aave, Spark, and Compound. The majority of the allocation was directed to Aave, with 10,000 ETH placed in Aave Prime and 20,800 ETH in Aave Core.
At that moment, the Ethereum Foundation indicated that staking was being explored, along with various other decentralized finance (DeFi) opportunities.
A request for comment was sent to the Ethereum Foundation , but no response was provided by the organization.
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, it was also mentioned that the Foundation is 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.
