Aave, the decentralized money market, has issued specifications regarding the launch of its version 2 that will focus on bringing home mortgages onto the Ethereum platform, which will automatically improve DeFi (decentralized finance). Before this, Aave protocol reached a market cap of $1 billion, which later recorded to be $5.8 billion in TVL (total value of assets locked) in DeFi, which led Aave to the release of version 2.0.
In this endeavor to bring home mortgages to DeFi, the Aave network has partnered with RealT, which is a leading real estate tokenization firm. Launched in 2019, RealT is the first real estate tokenization firm that allows the investors to buy shares directly from LLC properties. For this, each RealT token holder can earn their share of the revenues from the property in stable coins that get credited directly into their wallets.
Along with the collaboration with RealT, Aave also introduces many new features in the new version, like, native credit delegation and debt tokenization. With these new features, users would be able to tokenize their debt positions. Along with these, the borrowing rates have also been stabilized, which means that the borrowers will now be able to lock down their borrowing interest rate up to a certain period, thereby ensuring the predictability of their finance costs.
The Aave RealT collaboration will enable users to deposit their tokens directly into Aave, which can later be used as collaterals to borrow stablecoins. The ability to use RealT assets makes the availability of the “mortgaged” loans on the Ethereum network accessible to a greater number of users. This allows users to use their Real Estate tokens to finance their diversified liquidity needs or innovative investment strategies.
RealT assets collect stable coins regularly, that will help it to leverage these assets as “income” that can again be used in repayment of the loans, thereby rendering the loan mortgage system working effectively on the Ethereum platform. With this collaboration, RealT Tokens holders will be able to reap the benefits of Aave’s ability to provide them with a loan on their investments, that can again be deposited as collateral for their finance purposes.
RealT will also allow private tokenization in the years to come, which means that a person who currently owns real estate can tokenize his property, not with an intention to sell it but to transition it from a centralized system to a decentralized model. Also, the RealT market can help in decreasing the default risks for Aave’s liquidity providers.