The Aave DAO has approved the launch of GHO, a native stablecoin, on Ethereum Mainnet. The proposal introduces Aave V3 Ethereum Facilitator and FlashMinter Facilitator as initial facilitators, enabling Aave V3 users to mint stablecoins against their collateral, bringing forth a transformative phase for the Aave ecosystem and the DAO.
The introduction of GHO aims to make stablecoin borrowing on the Aave Protocol more competitive and generate additional revenue for the DAO. All interest payments made on GHO borrows will go directly to the DAO treasury.
The Aave DAO will have the ability to adjust GHO’s interest rate through a decentralized governance process. This ensures the financial framework of GHO remains managed by the DAO in a decentralized manner.
GHO introduces the concept of Facilitators, and the Aave V3 Ethereum Pool Facilitator and FlashMinter Facilitator have been approved. The initial parameters for GHO in the Aave V3 Ethereum Pool include a 1.5% borrow rate, a bucket capacity of 100 million GHO, and a 30% stkAAVE (staked AAVE) discount rate.
The FlashMinter Facilitator allows users to FlashMint GHO and repay in a single transaction, enhancing GHO’s ability to maintain its peg and incentivizing arbitrage. The FlashMinter Facilitator’s initial bucket capacity will be 2 million GHO with no fees paid to the Facilitators.
The implementation process involves deploying GHO ERC20, listing it as a borrowable asset, enrolling the Aave V3 Ethereum Pool and GhoFlashMinter as Facilitators, and configuring stkAAVE (staked AAVE) as the discount token for GHO’s borrow rate.
Once finalized, the proposal will move to the AIP phase for voting by the Aave DAO to officially launch GHO. Future plans include proposing a multi-chain strategy to the community.
Also Read: Aave Deploys V3 on Ethereum Layer-2 Network Metis
