In a significant development for the DeFi space, Aave, a leading decentralized finance protocol, has announced the pending launch of its native stablecoin, GHO. The proposal, currently awaiting approval from the Aave DAO, is set to bring a new era of financial stability and competitiveness to the Aave ecosystem.
The GHO Mainnet Launch proposal, also known as AIP 268, outlines the introduction of GHO to the Ethereum Mainnet. This comes after extensive community discussion, multiple phases of the Aave DAO governance process, and rigorous testing on Ethereum’s Goerli Testnet. If approved, users of Aave V3 on Ethereum would be able to mint GHO against their collateral, marking a significant milestone for the Aave ecosystem and the Aave DAO.
The launch of GHO is anticipated to enhance stablecoin borrowing competitiveness on the Aave Protocol and generate additional revenue for the Aave DAO. This is because 100% of the interest payments made on GHO borrows would be directed to the DAO treasury. Moreover, the DAO would have the ability to adjust GHO’s interest rate over time through a governance process, ensuring that GHO’s financial framework is managed in a decentralized manner.
The launch of GHO also introduces the concept of Facilitators. These entities, which could be protocols or other entities, could generate (and burn) GHO tokens up to a certain limit. The proposal combines two previously approved Facilitators, the Aave V3 Ethereum Pool, and the FlashMinter, into this AIP for approval.
The Aave V3 Ethereum Pool Facilitator would allow depositors to borrow GHO against their collateral deposited in the V3 Ethereum Mainnet Pool. If the AIP is approved, GHO would launch with a borrow rate of 1.5%, a bucket capacity of 100M GHO, and a 30% stkAAVE discount rate.
The FlashMinter, the second facilitator, would offer the same functionality as a Flashloan. However, instead of borrowing assets from a pool, users would have the ability to FlashMint GHO and repay in a single transaction. This feature would bolster GHO’s ability to maintain its peg by enabling more efficient arbitrage. The FlashMinter Facilitator would have an initial bucket capacity of 2,000,000 GHO and would not levy any fee.
The proposal also encompassed several key actions. It involved the deployment of the GHO ERC20 token and the transfer of control over the smart contract to the Aave DAO. Additionally, it included the listing of GHO as a borrowable asset in the Aave Protocol. Lastly, it outlined the configuration of stkAAVE as a discount token for the GHO borrow rate.
