The Aave DAO has released its multi-collateralized stablecoin, GHO, on the Arbitrum network as the first new market in its phased GHO cross-chain expansion strategy.
As per the announcement, GHO will roll out gradually, starting with Arbitrum as the initial network and gradually expanding to other networks using the industry standard Chainlink Cross-Chain Interoperability Protocol (CCIP).
The goal of making GHO available outside of the Ethereum mainnet is to improve liquidity, cut transaction costs, boost accessibility, and improve user experience—all of which will promote increased adoption and innovation.
Although GHO is issued on the Ethereum mainnet, Chainlink CCIP’s cross-chain strategy enables new use cases and integration possibilities. Expanding to Arbitrum, the largest Layer 2 network with $17.7 billion in TVL, allows GHO to be borrowed in the Aave Arbitrum pool, increasing affordability and opening new use cases.
Aave Labs Founder and CEO, Stani Kulechov, said, “Congratulations to the Aave community on achieving this milestone for GHO’s expansion beyond Ethereum mainnet to Arbitrum.” He added that the DAO’s dedication to stability and risk management is in line with the extension of GHO to Arbitrum.
Nina Rong, Head of Ecosystem Development at The Arbitrum Foundation, highlighted its potential to enhance accessibility, reduce transaction costs, and unlock substantial liquidity, expecting transformative new use cases to emerge in decentralized finance on Arbitrum.
Sergey Nazarov, Co-Founder of Chainlink, praised the Aave community for selecting Chainlink’s CCIP for secure cross-chain GHO transfers. He highlighted Aave’s strong commitment to security and predicted that CCIP’s advanced features would set a new standard in cross-chain infrastructure, similar to Chainlink’s leadership in providing trustworthy data feeds for DeFi.
The Aave DAO has selected Chainlink’s CCIP to facilitate secure cross-chain transfers of GHO, enhancing risk management and user security across various blockchain networks.
GHO ensures secure collateralization across chains, starting with Arbitrum, using CCIP’s lock-and-mint model to maintain supply consistency between Ethereum and other networks. This supports efficient cross-chain transactions and prepares GHO for scalable expansion across diverse blockchain ecosystems.
The Aave DAO has initiated a staged cross-chain plan, beginning with Arbitrum. By adding GHO as a borrowable asset to the Arbitrum Aave pool, all users will have access to more stablecoin borrowing alternatives and new yield prospects, improving risk diversification and opening the door for future developments.
The DAO has allotted 750,000 ARB through the Long-Term Incentives Pilot Program to assist with the launch of Arbitrum. With incentives for the DAO and service providers to improve liquidity and increase GHO’s utility, this allocation seeks to foster growth within the Arbitrum ecosystem.
To maximize liquidity provision and promote a healthy lending and borrowing environment on Arbitrum, the Aave Liquidity Committee will deliberately make use of these incentives.
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