Crypto News– Following its recent launch, GHO has made rapid strides, achieving a circulating supply of 22 million within a matter of weeks. Notably, its growth trajectory has defied adverse market conditions, largely attributed to its GHO borrow rate being positioned below prevailing stablecoin borrow rates.
The Aave Community Suggests Raising the GHO Lending Rate to 2.5% to Prevent Depreciation
While maintaining strong liquidity and expanding remains GHO’s core market strategy, the existing peg deviation (currently approximately $0.975) has impeded its progress and eroded market confidence.
Central to the proposal is the elevation of GHO’s annual loan interest rate, presently set at 1.5%, to a proposed 2.5%. The underlying motivation behind this adjustment is twofold: to address GHO’s peg instability and fortify its standing and potential for expansion within the market.
The voting process, slated to begin tomorrow, is scheduled to conclude on September 3rd.
This situation, coupled with the scarcity of holding options and the inability to use GHO as collateral, has spurred tactics like one-sided liquidity provisioning in stable swaps, particularly prevalent in Balancer pools.
The proposal assumes added significance in light of the impending sDAI onboarding integration. This integration is projected to exert downward pressure on GHO due to short-term selling, especially under the current borrow rate structure, thereby exacerbating the challenge of maintaining GHO’s peg.
As reported by Coincu, Aave took the step of temporarily halting the GHO stablecoin’s ecosystem integration due to the identification of a technical issue. This issue temporarily suspended GHO under the oversight of Aave Guardians during the integration process of GHO with the Aave V3 GHO pool.
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