Aug 01, 2022 Frank Stewskid

AAVE is about to launch a stablecoin called GHO

A proposal on the Aave snapshot page regarding the creation of a new stablecoin was just accepted by the community. GHO, as the token will be named, will be mintable against users’ supplied collaterals, and the stablecoin’s borrowers will continue earning interest on the underlying supplied collateral, as is with all borrow transactions on the Aave protocol. 

According to the proposal, GHO will provide benefits for the community through the AaveDAO by sending 100% of interest payments on GHO token borrows to the DAO. The digital asset is to be administered by the Aave governance system which needed to decide wether to support Aave for the cost and work associated with GHO. The vote has since passed with 99.99% of the community voting in favour of the proposal.

The Aave team didn’t hide their satisfaction with the community’s engagement in providing feedback on the proposal, by noting a few ideas brought up by it such as: attention to potential pitfalls around DAO-set interest rates, the importance of supply caps, the value that a peg stability module could bring, and the necessity for properly vetting potential facilitators. 

The Ethereum v2 market is to be the first facilitator of GHO and will also allow for audits to take place while the project anticipates broader community approval. Following this stage, the team plans to hold another voting event over a separate proposal outlining a starting state for GHO incorporating the community’s feedback.

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