Aave Passes Proposal for Yield-Generating Stablecoin GHO

The fully collateralized stablecoin is native to the Aave ecosystem and will be initially available on the Ethereum network.

AccessTimeIconAug 1, 2022 at 7:23 a.m. UTC
Updated Aug 1, 2022 at 1:35 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

An Aave community proposal to launch a native crypto-based stablecoin, GHO, was passed over the weekend with 99% votes in favor of the proposal, Aave's governance page shows.

The proposal was intended to improve on the features of Aave's lending platform, as previously reported. Some 501,000 aave (AAVE) tokens were used to cast votes in support, with just 12 tokens in opposition. Address 0x5B3bFfC0bcF8D4cAEC873fDcF719F60725767c98 exerted the largest weight on votes, putting up 183,000 AAVE in support of the proposal.

CoinDesk - Unknown

Over 99% of the Aave community voted in favor of the proposal. (Aave Governance)

Aave is a decentralized finance (DeFi) platform that locks over $6.8 billion worth of various cryptocurrencies on supported networks, data from DeFiLlama shows. DeFi refers to lending, borrowing and other financial activities carried out on a blockchain, without third-party support. Aave is a lending and borrowing platform that allows users to earn yields on their pledged tokens.

GHO would soon be offered to Aave users and allow them to mint the token against their supplied collaterals. The token can be minted by users against a diversified set of crypto assets. GHO holders will continue to earn interest on the supplied collateral, just like other lending transactions on Aave.

The token would work similarly to existing algorithmic stablecoins, which mint exactly $1 worth of tokens when users provide $1 worth of cryptocurrency. In GHO’s case, a user must supply collateral (at a specific collateral ratio) to be able to mint GHO. If a user repays a borrow position (or is liquidated), the GHO protocol burns that user’s GHO, the proposal explained.

As per the proposal, the interest payments on the stablecoin will be sent to the protocol's decentralized autonomous organization (DAO), generating revenue for the community and allowing the DAO to bolster its treasury for funding future products or tools.

All decisions relating to GHO will be in the hands of the Aave community.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.