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.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone

Research

Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.

/

article-image

OP holders might not be feeling very optimistic with the rollup’s token unlock schedule now in effect

article-image

Two lords are pushing for the government to ensure that the Bank of England could not implement “Britcoin” without legislative backing

article-image

This is the second fee switch proposal that failed to pass a community vote

article-image

This partnership comes as Nike released its first NFT collection, Our Force 1, this month

article-image

The weaknesses of large language models like ChatGPT are “too great to use reliably for security,” OpenZeppelin’s machine learning lead says

article-image

Giddy will now enable users to spend their yield on real-world goods and services