The Ethereum Foundation borrowed $2 million using 10,000 Wrapped Ether as collateral through Aave’s GHO stablecoin in February 2025. Smart move, actually—instead of dumping ETH and triggering market panic, they’re keeping their assets while accessing cash for operations and grants. Aave’s founder called it a “full DeFi circle” moment. The community seems mostly pleased since it avoids the usual “ETH is crashing” drama that follows EF sales. There’s more to this strategic shift than meets the eye.
The Ethereum Foundation just pulled off a $2 million borrowing move that’s got the DeFi world talking. They didn’t sell ETH this time—they borrowed against it instead, using 10,000 Wrapped Ether as collateral to secure $2 million worth of GHO stablecoin from Aave in February 2025.
This isn’t your typical foundation funding strategy. Usually, EF just sells ETH when they need cash. But apparently, they’ve discovered what the rest of DeFi figured out ages ago—you can actually use your crypto without saying goodbye to it. Revolutionary stuff, really. The move exemplifies how peer-to-peer lending has transformed traditional financial processes.
The loan gives EF operational funding for day-to-day expenses and ecosystem grants without triggering another round of “ETH is dumping” panic tweets. Smart move, considering how the market reacts every time they breathe near their treasury.
This borrowing strategy lets EF fund operations while dodging the usual market meltdown that follows their treasury moves.
Aave’s founder is practically doing cartwheels over this whole thing. He’s calling it a “full DeFi circle” since EF is simultaneously supplying collateral and borrowing assets on the platform. He’s also pushing the whole “looping” concept—basically borrowing and staking repeatedly to compound yields. Because nothing says confidence like your biggest borrower being the foundation behind the blockchain you’re built on.
GHO, Aave’s stablecoin with roughly $249 million in circulation, gets a nice boost from this high-profile usage. Nothing validates a stablecoin quite like a major foundation betting their treasury on it.
But wait, there’s more. EF also staked 50,000 RAIL tokens in Railgun, a privacy protocol, worth about $50,000. Pocket change compared to the loan, but it signals their interest in privacy-preserving DeFi transactions. Whether this connects to their borrowing strategy remains anyone’s guess.
The community’s reception has been mixed but mostly positive. Market observers appreciate that EF avoided another ETH sell-off, which could stabilize price dynamics. Some noted that EF might end up selling the borrowed GHO anyway, but Aave’s leadership seems fine with that. The Foundation previously deployed 45,000 ETH worth $120 million to lending protocols, marking their deeper dive into DeFi participation. The news broke when PeckShieldAlert reported the transaction on May 29, 2025, at 10:30 AM UTC.
This whole maneuver showcases EF’s evolution from simple treasury management to active DeFi participation. They’re not merely building the infrastructure anymore—they’re using it too.
