Aave DAO Approves Crypto-Backed Stablecoin GHO

Aave users and borrowers will be allowed to mint GHO against their supplied collaterals while earning interest on the underlying

article-image

Stani Kulechov, Founder and CEO of AAVE | Blockworks exclusive art by Axel Rangel

share

key takeaways

  • A proposal to implement Aave’s crypto-collateralized stablecoin has passed by a majority DAO vote
  • Users will soon be allowed to mint the stablecoin against their supplied collaterals while still earning interest

Decentralized finance (DeFi) lending protocol Aave will soon inject a new crypto-collateralized stablecoin into its ecosystem following the conclusion of a unanimous vote via its DAO on Sunday.

A proposal put forth by Aave Companies, a group of development teams working in support of the protocol, on Thursday asked users to weigh in on whether its US dollar-pegged GHO stablecoin should be launched.

The decentralized autonomous organization (DAO) voted with roughly 501,000 AAVE, or 99.9%, in the affirmative, compared with 17 abstentions and 12 against the idea, according to results from a voter snapshot.

The move means Aave users and borrowers will be allowed to mint GHO against their supplied collaterals while earning interest on the underlying, similar to how other borrowed transactions function.

Unlike algorithmic stablecoins, whose designs have been called into question following the collapse of Terra, crypto-backed stablecoins are assets collateralized by a basket of other digital assets.

Yet like its algorithmic cousin, GHO will be created by users when they supply the required collateral. When a user repays a borrow position, the GHO protocol governing the stablecoin burns that user’s GHO, according to an initial proposal on July 8.

“Borrow interest rates for GHO will be determined by the AaveDAO, with a stable rate that may be adapted depending on market conditions,” Aave Companies said. “This design retains the Aave protocol’s borrow interest rate model flexibility, and it will be possible in the future to implement any interest rate strategy the Aave community sees fit.”

Founded in 2017 following a $16 million ICO raise, Aave is the DeFi sector’s third-largest protocol by total value with around $6.58 billion locked up in smart contracts, per DeFi Llama, behind Lido and MakerDAO.

Aave’s native token (AAVE) has risen 70% over the past month and is changing hands for around $99.40, up 4% on the day.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

HYATT REGENCY SALT LAKE CITY

TUES, OCT. 8, 2024

Guided by the expertise of Blockworks Research Analysts team, this one day event will feature senior leaders, entrepreneurs, and developers from across the crypto industry. Attendees will have the opportunity to participate in an immersive experience to explore the latest trends, […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

hivemapper.jpeg

Research

We believe crypto market participants overlook Hivemapper’s fundamental potential due to a poor understanding of both the niche map data market and Hivemapper’s positioning relative to incumbents. Hivemapper’s token model catalyzes both a cost and product advantage via unmatched map freshness and near real-time accuracy, which is its wedge into a market characterized by stale data and high data collection costs. Its current and potential future product suite may represent one of the strongest possibilities for PMF in crypto today.

article-image

The Fidelity Ethereum Fund, like other proposed ETH ETFs, seeks to stake a portion of its assets, according to the firm’s Wednesday registration statement

article-image

The DAO first voted on enabling SAFE transfers over a year ago

article-image

The final Bitcoin halving, where the mining reward becomes smaller than one satoshi, is expected to occur in 2140

article-image

The Department of Justice and Commodity Futures Trading Commission announced back-to-back lawsuits against KuCoin Tuesday

article-image

Judge Failla found that Coinbase didn’t operate as an unregistered broker in offering its wallet service

article-image

A fund by Laser Digital offers investors exposure to the Polygon network, while a new 21Shares ETP focuses on staking rewards from Toncoin