The Aaave community members are poised to vote on whether to finally deploy gho ($GHO) on the Ethereum chain.
Aave is a lending and borrowing platform which recently introduced its own native algorithmic stablecoin, gho. An stablecoin is a type of cryptocurrency designed to maintain a stable value by utilizing algorithmic mechanisms. Unlike traditional cryptocurrencies, stablecoins aim to minimize price fluctuations and provide a stable store of value. In the case of gho, an algorithm determines its supply and demand ratio.
Gho will be pegged to the US dollar and its supply will be managed by the Aave DAO as well as its interest and risk parameters. Userds mint gho by using assets they have supplied on to the protocol as collateral. Gho holders will then continue earning interest on their assets. The stablecoin has been on the Goerli testnet and has so far encountered no problems.
In a governance post last June 6, Aave Companies released its proposal to deploy the stablecoin on Ethereum’s mainnet. With its deployment, Aave expects stablecoin borrowing on the Aave Protocol to become “more competitive and generate additional revenue for the Aave DAO by providing to the DAO treasury 100% of the interest payments made on GHO borrows.”
Gho will be introduced via “facilitators”: the V3 Ethereum Pool Facilitator and the FlashMinter Facilitator. The former allows for gho lending against their collateral while the latter functions akin to a flash loan, which are loans not requiring any collateral. These facilitators can be other protocols or entities.
Aave has recently launched its V3, which further optimized the yield generation and borrowing power of users’ assets. Apart from its plans to deploy gho to Ethereum, it is also eyeing the deployment of its V3 to Coinbase’s Base network. Aave has been the leading lending platform with over $5.6 billion in total value locked (TVL), per DefiLlama. The $5b is split between its V2 ($3.9 billion) and V3 ($1.95 billion).
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