Aave Proposes Launching GHO Stablecoin On V3

Key Points:

• After a final round of community deliberation, the Aave protocol suggests deploying the GHO stablecoin to the mainnet.
• If approved, a native GHO stablecoin with a borrowing ceiling of $100 million will be established.
• When this proposal is approved, users of V3 on Ethereum can mint GHO against their collateral, ushering in a new age for the ecosystem.

After a conversation with the community, Aave has offered to deploy the stablecoin GHO mainnet on the Ethereum network, giving users another choice when utilizing other stablecoins on the Ethereum network.

The ARFC suggests that GHO be launched with two first facilitators: the Aave V3 Ethereum Facilitator and the FlashMinter Facilitator.

The suggestion was met with enthusiastic support in the governance forum, with a majority of members seeking a formal governance vote.

If authorized, the introduction of GHO will make stablecoin borrowing on the protocol more competitive and provide more money for the Aave DAO by giving 100% of interest payments received on GHO borrows to the DAO treasury.

According to Aave, this new product is intended to improve competitiveness in the DeFi borrowing market and produce more revenues for the Aave DAO, which will receive 100% of the interest on borrowing GHO.

The choice to introduce GHO may have been influenced by Curve Finance’s successful deployment of stablecoin crvUSD, which debuted last month and has garnered positive feedback from DeFi customers.

The addition of an asset-backed stablecoin might help decentralized exchange (DEX) trade. Due to memecoin trading activity and regulatory pressure on centralized exchanges, the volume of transactions on DEXs has increased in recent weeks.

According to Evan Kuo, CEO of Fragments Inc., the recent spike in trading volume on DEX may draw the attention of authorities.

FlashMinting is an option for highly technical users. Instead of borrowing assets from a pool, users may produce and return GHO in a single transaction via Flashminting.

FlashMinting enables users to create GHOs without requiring collateral, in the same way as flash loans on other DeFi platforms allow users to borrow a digital asset, but only if the loan is returned in the same block of transactions.

FlashMinter will start with 2 million GHO and no facilitator fees, which the protocol thinks will encourage more arbitrage profit chances.

GHO will introduce Facilitators, which are protocols or organizations capable of producing and consuming a certain quantity of GHO. Upon launch, there will be two authorized facilitators: Aave V3 Ethereum Pool and FlashMinter, both of which have previously been accepted by community voting.

Users may utilize the Aave V3 Facilitator to deposit ETH as collateral to borrow GHO. The loan interest rate for this pool will be set at 1.5% once it is active, with an initial maximum of 100 million GHO and a 30% discount for staked Aave holders (stkAAVE).

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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