Aave is a leading decentralized finance (DeFi) protocol, primarily based on the Ethereum blockchain. It has successfully deployed its native stablecoin GHO on Ethereum’s Goerli testnet.
An Aave community proposal to launch a native crypto-based stablecoin, GHO, was passed over with 99% votes in favor of the proposal on JULY, 2022. 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.
Through the deployment of GHO on the Ethereum testnet, potential adopters and developers of the stablecoin can access the stablecoin’s codebase and test how it works before the stablecoin is released to the general public on the Ethereum blockchain. GHO stablecoin 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.
The testnet is ready for testing, but the launch of the GHO mainnet depends on community discussions and approval through the Aave DAO which is in charge of Aave governance through proposals and voting. The DeFi community has been eagerly waiting for the GHO stablecoin launch since the Aave community overwhelmingly supported its development in August last year. All decisions relating to GHO will be in the hands of the Aave community.
The GHO 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 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.
The interest payments on the stablecoin will be sent to the protocol's decentralized autonomous organization, generating revenue for the community and allowing the DAO to support its treasury for funding future products or tools.
GHO tokens can be minted by users against a diversified set of crypto assets. Borrowers of GHO will continue earning interest on the underlying supplied collateral, just as in all other borrow transactions on the Aave Protocol.
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