Aave Labs buys Avon to launch fixed-rate lending on its protocol

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The press release, published on X, describes an overall operation which leaves little to chance. Aave Labs absorbs the entire technical stack of the startup. Avon sells its fixed rate and variable rate loan protocols.

Aave Labs has acquired the team and technology behind @avon_xyz, one of the leading companies working on fixed-rate lending onchain. The Avon team brings deep protocol engineering and market-structure expertise to Aave Labs as it expands onchain lending for a mainstream… pic.twitter.com/70GbLY9xDs

Also leaving are the onchain order book, domain names and associated assets. Aave Labs did not disclose the amount of the transaction.

Three employees are making the trip. Founder Prince Sinha and Ayush Kaul join the engineering team, while Omar el-Ashaal takes a role in business development.

Avon, founded by Prince Sinha, had built fixed rate and variable rate lending markets, as well as an order book designed for new onchain credit structures.

Its trademark remains a so-called “segmented risk” approach. The book compares credit offers and requests in real time, confining the risk to each loan strategy.

For Stani Kulechov, director of Aave Labs, fixed rates are part of the financial products that users already use. This acquisition should help the network reach institutions, fintechs and individuals.

On Aave, no one today chooses their interest rate, which is continuously recalculated by an algorithmic curve based on the share of liquidity already lent in each pool.

When the demand for borrowing rises, the cost rises with it, and a borrower can see his bill jump overnight without having changed his habits.

The fixed rate reverses this logic. The percentage is fixed at signature, then remains the same until final repayment, and the borrower knows its total cost before even committing.

For example, a fintech company that finances three months of stock wants to budget for this item from the start, instead of discovering its invoice according to the market. At the fixed rate, the cost is written in black and white, which protects its margin.

The target clientele, corporate treasurers, fintechs and financial institutions, have always lived at this pace. Traditional finance operates largely on this basis.

Machine-translated from French