Following unsecured loans, Aave plans to introduce real estate into the DeFi ecosystem.

According to the latest announcement from the decentralized lending protocol Aave on September 1st, the platform has partnered with RealT, a company dedicated to tokenizing real estate, to allow people to use their tokenized real estate as collateral to borrow stablecoins on the Aave platform.

Tokenized Real Estate Combined with Lending

Tokenizing real estate has been a long-standing concept, where users can purchase shares of properties to earn rental income or benefit from the appreciation of the real estate without having to buy the entire property. RealT, based in Florida, has further extended the application of tokenized real estate. According to a recent announcement, the company has partnered with decentralized lending protocol Aave, aiming to use these tokenized real estate assets as collateral for loans.

The advantage of this combination is that these RealT tokens can be used as collateral to obtain stablecoin loans equivalent to cash. In other words, when in need of funds, you can directly use RealT tokens (representing your stake in the property) as collateral to borrow USD stablecoins on Aave. Later, when you receive your salary or investment returns, you can choose to repay the loan immediately and reclaim your real estate ownership.

Traditional real estate mortgage processes are complex and time-consuming, while the integration of tokenized real estate with Aave enables a quick and instant loan process. Stani Kulechov, the founder of Aave, stated:

"This application is a particularly important and practical tool when property values start to increase, and owners wish to enjoy that value without selling."

Furthermore, according to Aave'sannouncement, to prevent situations where the collateral value for real estate loans is insufficient, the value of RealT tokens will be imported from real-world data by decentralized oracle Chainlink.

However, due to Aave's decentralized governance structure, whether to support the real estate token as collateral will require community voting for implementation, so the specific release time is currently undecided. In addition, only whitelisted wallet addresses can receive RealT tokens, so further observation is needed to see if this restriction will impact actual use.

Aave Shines in 2020

Apart from the outstanding performance of its token (LEND) price this year, Aave has seen a significant increase in platform adoption. According to data from DeFi Pulse, the total locked asset value on the platform was around $70 million in early June, and has now surged to $1.5 billion. Additionally, the protocol's UK corporate entity, Aave Limited, received approval from the UK Financial Conduct Authority (FCA) on July 7, 2020, allowing it to issue e-money and provide related electronic payment services.

Moreover, Aave's diversification of products is a key feature. In July 2020, the platform announced the launch of a "credit delegation feature," realizing uncollateralized loan services on the blockchain, bringing more diverse applications to the DeFi space.