Aave proposes to launch the GHO stablecoin on the Ethereum network’s mainnet. This move provides users with an additional option when it comes to utilizing various stablecoins on the Ethereum network.
Aave Proposes Launching GHO Stablecoin On V3
After engaging in discussions with the community, Aave has proposed the deployment of the GHO stablecoin on the Ethereum network’s mainnet. This initiative aims to offer users an additional stablecoin option when utilizing the Ethereum network alongside other stablecoins.
The proposal has received widespread support in the governance forum, with the majority of members advocating for a formal governance vote to authorize its implementation.
If approved, the introduction of GHO is expected to enhance competitiveness in the DeFi borrowing market. Additionally, it will generate more revenue for the Aave DAO by directing 100% of interest payments received from GHO borrows to the DAO treasury. Aave intends for this new product to drive growth and improve profitability for the Aave DAO.
The decision to introduce GHO may have been influenced by the successful launch of stablecoin crvUSD by Curve Finance, which received positive feedback from DeFi users after its recent debut. Incorporating an asset-backed stablecoin like GHO could contribute to the trading volume on decentralized exchanges (DEXs).
Recent weeks have seen an increase in DEX transaction volumes due to the surge in memecoin trading activity and regulatory pressure on centralized exchanges.
Evan Kuo, CEO of Fragments Inc., suggests that the rise in DEX trading volume could attract attention from regulatory authorities.
For technically proficient users, FlashMinting offers an alternative approach. Instead of borrowing assets from a pool, users can create and return GHO in a single transaction using FlashMinting.
This method allows users to generate GHO without requiring collateral, similar to flash loans on other DeFi platforms, with the condition that the loan is repaid within the same block of transactions.
FlashMinter will initially provide 2 million GHO without any facilitator fees, aiming to encourage arbitrage profit opportunities.
GHO will introduce Facilitators, which are protocols or organizations capable of producing and consuming a specific quantity of GHO. The launch will include two authorized facilitators: Aave V3 Ethereum Pool and FlashMinter, both of which have been approved through community voting in the past.
Users will have the option to utilize the Aave V3 Facilitator by depositing ETH as collateral to borrow GHO. The loan interest rate for this pool will be set at 1.5% upon activation, with an initial cap of 100 million GHO and a 30% discount for staked Aave holders (stkAAVE).
To access our previous AAVE proposal article: Cryptodataspace
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