Aave Labs buys Avon team in fixed-rate lending push

Aave Labs has bought the team and technology of Avon, a fixed-rate lending startup, to bring fixed rates to its onchain lending network.

Aave Labs said the deal covers Avon’s fixed- and floating-rate lending protocols, an onchain order book, domains and related assets. Financial terms were not disclosed. Prince Sinha and Ayush Kaul join the company’s engineering team and Omar el-Ashaal joins business development as an associate, Aave said in a statement shared with The Block on Friday, November 6.

The Avon team will initially work on fixed-rate lending as Aave expands the range of loans available on its network, Aave Labs said in the announcement.

Avon’s order book matches lending opportunities in real time while keeping risk isolated to each individual strategy. The startup also built interest-rate pricing, risk isolation and lending market design.

Fixed rates are standard in traditional finance, where a borrower locks an interest rate for a term, but Aave’s lending rates have historically floated with pool utilization. CEO Stani Kulechov framed the purchase around the company’s push toward institutional clients, fintechs and everyday users, according to the statement.

What the deal signals

Aave described itself as the largest onchain lending network, with more than $30 billion in deposits and over $12 billion in active loans at the time of the announcement, figures the company supplied itself. Adding fixed-rate products targets the loan structures that institutions rely on.

The purchase follows a stretch of institutional groundwork. On November 3, Aave Labs, Kamino and Veda submitted a DeFi lending legal framework to the SEC. In October, Aave Labs proposed a Cayman foundation to hold the Aave brand and intellectual property. In April, the Aave DAO approved a $25 million funding grant for Aave Labs.

“Aave’s goal is to bring the best of finance to everyone, and that means offering the kinds of products users already rely on, including fixed rates,” Kulechov said in the statement.

“The Avon team have spent time working on some of the hardest problems in onchain lending, and they will help us bring Aave to institutions, fintechs, and everyday users around the world,” he said.

Any integration of Avon’s technology into Aave’s core protocol could still go through AAVE token holders, who vote on protocol changes through the DAO’s governance process. Aave Labs is also developing its V4 architecture, designed to support a wider range of lending structures than the current protocol handles.