The Aave protocol has deployed the GHO stablecoin on the Ethereum mainnet
Date: 2023-07-17 Author: Karina Ziganova Categories: BLOCKCHAIN, BUSINESS
The Aave lending protocol has deployed the decentralized stablecoin GHO on the Ethereum mainnet.
The move was the result of an approved governance vote held by decentralized autonomous organization (DAO) Aave earlier this week. The GHO stablecoin, which was originally released on the Goerli testnet, will now be available to users in the third version of Aave on Ethereum.
The launch of their own stablecoins by DeFi platforms seems to have evolved from isolated episodes to an industry trend. Curve Finance, one of the largest decentralized exchanges by trading volume, also launched a super-collateralized stablecoin in May.
How Aave's GHO works
GHO is backed by Ethereum (ETH): Aave issues it as an overcollateralized loan. This method involves users pledging crypto assets that exceed the value of the amount they intend to borrow.
The stablecoin relies on the Ethereum Facilitator smart contract system, which allows you to deposit collateral and issue loans in GHO. At the same time, the deposited funds are stored in the pool of the main network.
Once launched, the issuance of GHO will be allowed to "facilitators" – organizations sanctioned by the DAO. As expected, the first facilitator was the Aave V3 platform.
The most important feature of the stablecoin is that all interest accrued on loans will be redirected directly to the DAO treasury. The organization will vote and decide on the selection of eligible collateral assets for the GHO, as well as determine the risk parameters.
