Aave Horizon could expand its list of supported real-world assets by adding a tokenized high-yield bond fund. Securitize has submitted a proposal to add HINC — a tokenized share class of the Neuberger Securitize High Income Tokenized Fund — as a collateral asset on Aave Horizon. If approved, eligible users would be able to use HINC as collateral and borrow stablecoin liquidity against it.
The proposal was published by Securitize on August 18 and calls for adding HINC to Aave Horizon on Ethereum as so-called supply-only collateral. Users would be able to deposit the asset as collateral and borrow USDC, GHO and RLUSD against it. This would allow holders of the tokenized fund to access additional liquidity without selling or redeeming their positions.
What Is HINC?
HINC is a tokenized share class of the Neuberger Securitize High Income Tokenized Fund, created with the participation of Securitize and Neuberger Berman. The fund’s investment strategy is primarily focused on high-yield corporate bonds. Its portfolio may also inсlude CLO tranches, bank and leveraged loans, other income-generating fixed-income instruments, and liquid assets.
Neuberger Berman acts as sub-adviser to the fund and provides investment expertise in credit markets. The launch of HINC marked the first time Neuberger Berman served as sub-adviser to a tokenized fund. The product was launched across several major blockchain networks, including Ethereum, Solana, Avalanche and Sui.
Unlike a conventional cryptocurrency token, HINC represents a digital share in a regulated investment fund. Ownership of such tokens is subject to investor identification and eligibility requirements. Transfers are controlled at the smart-contract level, meaning only wallets that have completed the required KYC and AML procedures can receive and hold HINC.
The fund is aimed at professional and eligible investors. According to the Securitize proposal, the initial minimum subscription is $100,000, while subsequent investments may start from $1,000. Fund income is expected to be reinvested, meaning HINC’s value should be reflected through changes in net asset value per share rather than through regular distributions to holders.
Why HINC Matters for Aave Horizon
Aave Horizon is a specialized lending market on Ethereum designed to integrate tokenized real-world assets with DeFi infrastructure. Eligible participants can use tokenized securities and other RWAs as collateral to access stablecoin liquidity without having to sell the underlying assets.
This approach addresses one of the key limitations of tokenized assets. An institutional investor may hold a bond fund or another yield-generating financial instrument, but traditionally needs to sell or redeem the position to access cash. Horizon allows such assets to be used as collateral while providing liquidity directly through blockchain infrastructure.
Aave Horizon was launched in August 2025 and quickly became one of the largest on-chain lending markets focused on real-world assets. According to Aave, Horizon deposits have already exceeded $440 million, highlighting growing institutional interest in using tokenized financial instruments within DeFi.
HINC Could Expand Horizon Beyond Treasury Assets
Until now, Horizon’s collateral base has been largely focused on tokenized U.S. Treasuries, money market funds, and other investment-grade instruments. Adding HINC could represent an important expansion of this model.
If approved, HINC would become Horizon’s first collateral asset primarily backed by below-investment-grade corporate credit. This would allow Aave to expand its RWA infrastructure beyond relatively conservative government debt instruments and into assets that may offer higher yields while also carrying greater credit risk.
The potential difference between HINC’s yield and the cost of borrowing stablecoins could make the product attractive to certain market participants. For example, an investor could continue holding an income-generating asset while simultaneously using it as collateral to borrow USDC, GHO or RLUSD.
For institutional investors, this could also become a balance-sheet management tool. Instead of redeeming a fund position to access cash, they could potentially use HINC as collateral and obtain liquidity around the clock.
Tokenized Assets Are Becoming Functional DeFi Collateral
The proposed HINC integration reflects the broader trend of convergence between traditional finance and DeFi. Tokenization already allows shares of funds, government bonds, credit instruments, and other real-world assets to move onto public blockchains. The next stage is using these tokens not only for ownership and transfer, but also as active components of on-chain financial systems.
Aave Horizon already applies this model to other institutional products. For example, the tokenized VanEck Treasury Fund (VBILL) has been integrated into Horizon as collateral. VBILL holders can maintain exposure to tokenized Treasury instruments while simultaneously accessing stablecoin liquidity.
Adding HINC would extend this model into high-yield corporate debt. As a result, DeFi protocols could support a much broader range of traditional financial assets, while tokenized funds would gain functionality beyond simple digital ownership.
Higher Yield Also Means Higher Risk
The potential integration of HINC would also introduce new risks for Aave Horizon. Unlike U.S. Treasury securities, high-yield corporate debt is more exposed to credit risk, interest-rate changes, and deterioration in the financial condition of borrowers.
Another important factor is valuation. Cryptocurrencies trade continuously and have constantly updated market prices, while traditional investment fund shares are typically valued using net asset value, or NAV. For HINC, the proposal suggests using a price feed based on the fund’s NAV, with additional safeguards designed to protect against incorrect or abnormal price updates.
Liquidating this type of collateral is also different from liquidating conventional crypto assets. ETH or other liquid tokens can often be sold quickly on open markets, while a tokenized credit fund may have restrictions on ownership, transfers, and redemptions. As a result, parameters such as loan-to-value ratios, liquidation thresholds, price oracles, and the availability of eligible liquidators would be particularly important for HINC.
The Proposal Still Requires Aave Governance Approval
It is important to note that HINC has not yet been formally added to Aave Horizon. The proposal is still under community review and must pass Aave’s governance process, including technical and risk assessments.
In August, Aave updated the asset onboarding process for Horizon. New collateral assets are now expected to go through the standard DAO governance procedure, including publication of the proposal, risk assessment, technical analysis, and voting. This means the final parameters for HINC could still change before a potential launch.
For HINC specifically, Aave will still need to determine supply and borrowing limits, collateral ratios, liquidation parameters, oracle requirements, and other risk-management mechanisms. Only after the necessary reviews are completed and governance approval is secured could the asset become a fully supported part of Horizon.
What Is Aave?
Aave is one of the largest decentralized lending protocols. It allows users to supply digital assets to liquidity pools and earn yield, while borrowers can use their own assets as collateral to obtain loans.
The project was launched in 2017 under the name ETHLend and was rebranded as Aave in 2018. The word “Aave” means “ghost” in Finnish. Over time, the protocol expanded significantly and became one of the key infrastructure platforms in decentralized finance.
The AAVE token is used in the protocol’s governance systеm, allowing holders to participate in decisions regarding its development, market parameters, and other changes. In addition to conventional collateralized lending, Aave is known for flash loans — instant uncollateralized loans that must be borrowed and repaid within a single blockchain transaction.
Flash loans are widely used by developers and professional DeFi participants for arbitrage, collateral management, position refinancing, and other advanced on-chain operations.
Aave Strengthens the Connection Between TradFi and DeFi
The HINC integration proposal shows how quickly the tokenized real-world asset market is evolving. Tokenization was once viewed mainly as a way to move traditional securities onto blockchain infrastructure, but these assets are now gradually becoming part of fully functional DeFi ecosystems.
The ability to use a tokenized bond fund as collateral means a traditional financial asset could simultaneously generate investment returns and provide access to additional on-chain liquidity. For professional investors, this could improve capital efficiency and reduce the need to sell long-term positions to meet short-term funding requirements.
At the same time, expanding Horizon into high-yield credit instruments would require a more sophisticated risk-management framework. Corporate bonds, CLOs, and bank loans differ from cryptocurrencies and government securities in terms of liquidity, pricing frequency, and default risk. The success of the integration will therefore depend not only on user demand, but also on how effectively Aave can adapt its lending and liquidation mechanisms to the characteristics of traditional credit markets.
If the Securitize proposal is approved, HINC could become an important milestone in the development of Aave Horizon and demonstrate that tokenized high-yield bond funds can function not only as investment products, but also as fully usable collateral within decentralized lending markets. This would further narrow the gap between traditional finance and DeFi and could open the door to the integration of additional institutional asset classes into blockchain infrastructure.