Echelon: A simpler way to borrow and lend on Aptos
The Move-based ecosystem is thriving, yet decentralized lending platforms leave billions of dollars in assets underutilized. Enter Echelon, an Aptos-native lending protocol that promises to solve this fundamental problem by allowing users to rehypothecate (reuse) assets for superior yields through its innovative Move-first architecture.
This article examines Echelon's approach to high-efficiency lending, explores its achievement of a total value locked (TVL) of over $100 million in under eight months, details its aggressive expansion plans and considers whether this audited protocol can capture the lending market across Aptos and other Move-based blockchains.
Key Takeaways:
Echelon is a decentralized, Aptos-based noncustodial lending protocol that connects liquidity across the Move ecosystem.
It aims to eliminate the fundamental trade-off between capital efficiency and risk management that plagues existing decentralized lending protocols.
What is Echelon?
Echelon is a decentralized, Aptos-based noncustodial lending protocol that connects liquidity across the Move ecosystem. By leveraging advanced technical features, such as E-Mode and asset rehypothecation, it enables users to borrow and lend digital assets with superior capital efficiency and enhanced yields.
History of Echelon
Echelon was conceived as a next-generation money market designed to scale Aptos DeFi through efficient, composable debt infrastructure. The project was selected as the inaugural incubation by the Aptos Foundation and Thala Labs DeFi Fund, receiving a $100,000 grant to cover core development and audit expenses in recognition of its potential to catalyze ecosystem growth.
Echelonβs founding team strategically chose to build on Aptos for its speed, low latency and Move programming language capabilities. They recognized that high latency on EVM networks had inhibited the development of on-chain applications, while Aptos's parallel execution and sub-second oracles could enable the most capital-efficient DeFi experience possible.
In August 2024, Echelon secured $3.5 million in seed funding, led by Amber Group, with participation from Laser Digital, Saison Capital, Re7, Selini Capital and Interop Ventures. This institutional backing demonstrates strong confidence in the protocol's ability to revolutionize Move-based lending through superior capital efficiency and AAVE-inspired E-Mode functionality.
What does Echelon aim to achieve?
Echelon aims to eliminate the fundamental trade-off between capital efficiency and risk management that plagues existing decentralized lending protocols. Most platforms force users to accept low loan-to-value (LTV) ratios on correlated assets, leaving billions of dollars in capital sitting idle when it could be generating superior yields.
The protocol seeks to unify fragmented liquidity across the Move ecosystem by creating an interoperable lending infrastructure. Instead of isolated markets on individual blockchains, Echelon envisions seamless capital flows between Aptos, Movement and Initia that maximize efficiency for both lenders and borrowers.
Echelon also targets the institutional infrastructure gap in emerging blockchain networks. By delivering enterprise-grade lending capabilities with sophisticated risk management, the protocol aims to position Move-based chains as legitimate alternatives to established DeFi platforms within Ethereum and other mature ecosystems.
Beyond basic lending, Echelon aspires to become the foundational layer for advanced financial products. This includes enabling liquid staking strategies, real-world asset (RWA) tokenization and automated yield vaults that bring institutional-quality investment strategies to retail users worldwide.
How does Echelon work?
Echelon operates as a sophisticated money market whose users deposit assets into liquidity pools that become available for borrowing. Lenders earn interest on their deposits, while borrowers can access loans by providing overcollateralized positions, ensuring the protocol maintains solvency even during market volatility.
The platform's core innovation lies in its asset rehypothecation, which allows users to maximize capital efficiency by reusing their collateral. For example, users can deposit liquid staking tokens (such as Staked Thala APT, or sthAPT) as collateral, continue earning staking rewards on those tokens and simultaneously borrow additional APT in order to purchase more sthAPT, thereby amplifying their total staking yield.
Echelon's E-Mode functionality maximizes capital efficiency for correlated asset pairs. By borrowing APT against sthAPT collateral, users can access significantly higher LTV ratios because both assets have correlated price movements. This enables strategies such as leveraged staking that weren't previously possible with traditional lending protocols.
The protocol incorporates sophisticated risk management through dynamic interest rates and automated liquidation mechanisms. Robust oracle infrastructure powered by Pyth Network ensures accurate asset pricing, while Move's type safety provides additional security guarantees.
Features of Echelon
Echelon offers a comprehensive suite of features designed to maximize capital efficiency and provide institutional-grade lending across the Move ecosystem.
Borrow/Lend
Echelon's core lending functionality allows users to supply assets and earn competitive interest rates, while borrowers can access loans against their collateral. The platform incentivizes participation through a points program that rewards suppliers with one point per dollar lent daily, and borrowers with three points per dollar borrowed daily.
Echelon supports both a primary market for high-liquidity assets and isolated pools for long-tail tokens. This dual approach enables broad asset support while protecting lenders in the primary market from exposure to higher-risk assets, allowing Echelon to serve both aggressive and conservative yield strategies.
Interest rates
Echelon employs dynamic interest rate models that automatically adjust in response to supply and demand within each lending pool. When utilization increases, borrowing rates rise to incentivize more lending supply, while lower utilization leads to reduced rates that encourage borrowing activity.
The protocol's algorithm optimizes capital efficiency by ensuring competitive rates for both sides of the market. Lenders receive attractive yields that scale with demand, while borrowers access some of the most affordable rates in the Move ecosystem β particularly for correlated asset pairs through E-Mode functionality.
Supported assets
According to the latest data, Echelon has a total borrowed of $120.74 million, indicating significant adoption across various asset types. The protocol supports major cryptocurrencies and stablecoins, with plans to expand to include RWAs.
Version 1.1 will support RWA collateral (i.e., Ondo Finance's USDY) and covered call options vaults, demonstrating the platform's commitment to bridging traditional finance with DeFi. Echelon has integrated Wormhole and LayerZero to allow users to bridge their tokens, enabling cross-chain asset support and broader accessibility.
Oracles
Echelon uses a multi-oracle system that combines Pyth Network, Switchboard and custom price feeds to ensure accurate asset valuations for lending and liquidations. The protocol maintains fallback mechanisms that automatically source prices from decentralized and centralized exchanges if primary oracle providers experience outages.
For liquid staking tokens like sthAPT, Echelon implements custom pricing calculations that combine Pyth's APT price feeds with on-chain staking rate data from Thala. This approach captures the true underlying value of staked assets, rather than relying on potentially volatile spot market prices.
Echelonβs sophisticated oracle infrastructure enables safe high LTV ratios of up to 90% in E-Mode, while minimizing liquidation risks from temporary price fluctuations. By using exchange rates that reflect actual redemption values, the system protects borrowers from unnecessary liquidations during brief depegging events or periods of low liquidity.
Echelon road map
Echelon has emerged as a dominant force in Move-based DeFi since its April 2024 launch on Aptos. The protocol has a TVL of $153 million and $120.74 million in borrowed assets, serving tens of thousands of depositors across multiple chains.
The protocol's most significant expansion occurred in May 2025 with the launch of its dedicated app chain on Initia's mainnet. This cross-chain deployment allows users to lend and borrow assets like INIT, USDC and ETH while earning additional rewards through Initia's VIP program.
Echelon is targeting aggressive growth, with plans to exceed $300 million in TVL while doubling its supported assets. Accordingly, itβs preparing for launches on Movement's mainnet and plans to introduce a governance token soon, although specific timelines remain undisclosed.
The team is also pursuing institutional partnerships with various firms, such as Franklin Templeton and Ondo Finance, in order to expand RWA integration. A separate consumer platform called Echelon Earn is also in development to simplify access to both crypto yields and tokenized treasury products.
Closing thoughts
Although Aptos is a thriving blockchain with over $1 billion in TVL, traditional lending protocols have struggled to unlock efficient capital utilization on its network. Echelon has emerged as a potential solution by solving these capital inefficiency challenges through innovative rehypothecation and E-Mode features, delivering a simpler way to borrow and lend.
With $152 million in TVL, expanding RWA and Bitcoin asset support, $3.5 million in seed funding led by Amber Group and its governance token launch on the horizon, Echelon is well-positioned to become the foundational lending infrastructure across Move-based blockchains.
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