Ethereum Foundation (EF) has borrowed $2 million worth of GHO stablecoin from DeFi lending platform Aave, using wrapped ETH as collateral. The move marks a departure from the Foundation’s usual ETH sell-offs for its operations.
Aave Chan Initiative (ACI) founder Marc Zeller shared the transaction on X to promote using the Aave protocol. According to him, the EF did not need to sell any ETH to fund its objectives.
He said:
“They didn’t have to sell a single ETH to fund their objectives. Aave is designed for holders with conviction.”
While one user observed that the EF is now dumping GHO, Zeller noted that he would allow it. GHO is the decentralized stablecoin issued by Aave and currently has a circulating supply of $249 million
The protocol founder, Stani Kulechov, also acknowledged the transaction, describing it as a full-circle moment.
He said:
“The EF is not only supplying ETH to Aave but also borrowing from Aave. The full DeFi circle.”
Kulechov added that the next step is for the EF to loop on Aave. Looping is a DeFi strategy where users repeatedly borrow, swap, and stake several crypto assets to compound yield and maximize their returns and farm rewards.
Ethereum Foundation moves away from selling ETH
Interestingly, the recent transaction is not the first time the EF will deploy funds to DeFi protocols based on the network. In February, it deployed 45,000 ETH worth $120 million to various lending protocols such as Compound, Spark, and Aave.
At the time, Aave got the most funds, with 30,800 ETH worth $83.4 million, for Aave Core and Aave Prime, causing many people to praise the Foundation’s decision as an endorsement of the DeFi sector.
Following that deployment, the EF stated that more is still to come as it plans to explore staking. It further asked for suggestions from community members on deploying funds to show its commitment. The recent borrowing from Aave now shows that the EF’s focus on DeFi is not a one-time thing.
Still, the change in strategy is likely a reaction to the piling criticisms against ETH dumping. The Foundation, which spends millions on grants annually to support the Ethereum ecosystem, has developed a reputation for selling ETH to fund these grants and all its other activities, with most of those sales coinciding with ETH peaks.
Concerns about its ETH sales reached a fever pitch a few months ago after the slump in ETH price, which saw the token drop as low as $1,400, even as other assets saw gains. This led to increased calls for the Foundation to find another way to raise funds, which it now appears to have heeded.
The decision to stop selling and explore other strategies might also be due to the massive amount it has sold over the years. The EF has reportedly sold around 130,000 to 160,000 ETH and holds around 240,000 ETH as of the end of 2024.
ETH gets close to $2,800 despite the general decline in crypto prices
Meanwhile, ETH’s price increased to $2,780 today, its best performance since February 24. Although it has now declined to around $2,600, the gains were enough to defy general market performance, with other tokens falling in value.
Overall, Ethereum has become one of the best-performing cryptocurrencies in the past month. It is up 45% within that period, wiping away most of its losses. According to 30 CoinMarketCap, ETH decline year-to-date now stands at 21%. Thirty days ago, it was over 50%.
Several factors are responsible for its recent positive performance. This includes a recent announcement by Nasdaq-listed SharpLink Gaming of its plans to spend $425 million to build a corporate ETH treasury. Spot Ethereum exchange-traded funds have also enjoyed eight consecutive days of inflows.
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