The GHO is coming – Aave is an emblematic protocol of the decentralized finance. In total, the protocol has $6.2 billion in TVL, making it the 2nd largest DeFi protocol. From now on, Aave aims to diversify its service offering with the launch of stablecoin GHO.
GHO: Aave’s stablecoin
It’s now Aave has been planning to create its own stablecoin for almost a year now.. Thus, the first drafts of the GHO project saw the light of day in the summer of last year. Subsequently, in early August 2022, the Aave community voted overwhelmingly in favor of the GHO stablecoin proposal..
From the outset, the idea was to create a over-collateralized stablecoin. Namely, that it is insured by other cryptocurrencies deposited to issue GHO tokens.
More recently, in February 2023, the GHO stablecoin made its major launch on Ethereum’s Goerli testnet. This pre-launch phase enabled all the necessary tests to be carried out with regard to the mechanics of stablecoin.
Finally, at the beginning of June, AaveCompagnies published a governance proposal to prepare for GHO deployment.
This proposal has now reached the next stage in the governance process. Indeed, it has been put to the vote between July 10 and 14.
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Community in favor of GHO launch
At the end of the vote, the community largely rallied behind the launch of stablecoin. In fact, 881,059 AAVEs were filed in favor of the proposal, against only 10 AAVEs against.
In particular, this proposal specifies how GHO will be introduced and created. In practice, it aims to introduce GHO through « facilitators ».
On the one hand, we find the facilitator of the Ethereum Aave V3 pool. It enables Aave V3 users to issue GHOs against assets deposited on the platform.
On the other hand, we have the FlashMinter facilitator. This allows users to issue GHOs and redeem them in the same transaction.
Of course, borrowers will also have to pay fees. For example interest payments made on GHO loans will be 100% redirected to the DAO treasury..
More events and benefits
Acceptance of this proposal will generate the following events:
- Deployment of the ERC-20 GHO ;
- Transfer of control over smart contract to DAO Aave;
- Registration of GHO as a borrowable asset in the Aave protocol;
- Registration of the Ethereum Aave V3 pool as the first GHO facilitator;
- Deployment of GhoFlashMinter and registration as second GHO facilitator;
- Configuration of stkAAVE as discount token for GHO borrowing rate.
In addition, holders of stkAAVE, the token issued when AAVE tokens are deposited in staking, will be favored.
Indeed, the stkAAVE will enable you to obtain reduced borrowing rates. Initially, the reduction will be on the order of 30%.. A value that may be modified in the future by governance.
This means that stkAAVE holders would receive a 30% discount on the 1.5% GHO borrowing rate, effectively reducing their borrowing rate to 1.05%.
For its part, Ethereum network, cradle of DeFi, prepares for Cancun hard fork. This will introduce Protodanksharding, an update that should drastically improve rollup performance.
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