Aave DAO Aims To Launch GHO On Ethereum Mainnet Through Aave V3

July 11, 2023 - Around 3 mins mins to read

Key Points:

Aave DAO is considering launching GHO stablecoin on Ethereum, introducing facilitators for enhanced functionality.
The proposal aims to expand the Aave ecosystem and generate revenue for the DAO through GHO borrowing.
Users can mint GHO against collateral, and the DAO governs interest rates and financial framework.

Aave DAO, the decentralized autonomous organization governing the Aave Protocol, is currently evaluating a proposal to introduce GHO, an Aave native stablecoin, on the Ethereum Mainnet. The proposal also suggests the implementation of two facilitators, namely the Aave V3 Ethereum Facilitator and the FlashMinter Facilitator, to enhance the functionality of GHO. If approved, this initiative would mark a significant milestone for the Aave ecosystem and the Aave DAO.

Aave DAO Aims To Launch GHO On Ethereum Mainnet Through Aave V3

Following extensive community discussions, multiple phases of the Aave DAO governance process, and rigorous testing on Ethereum’s Goerli Testnet, the proposal aims to bring GHO to the Ethereum Mainnet alongside the Aave V3 Facilitator and FlashMinter Facilitator.

If the proposal is approved, users of Aave V3 on Ethereum will have the ability to mint GHO against their collateral, ushering in a new era for the Aave ecosystem and the Aave DAO.

The introduction of GHO is expected to enhance stablecoin borrowing on the Aave Protocol, creating more competition and generating additional revenue for the Aave DAO. Notably, 100% of the interest payments made on GHO borrows will be directed to the DAO treasury.

Once GHO is launched, the Aave DAO will have the authority to adjust GHO’s interest rate through a decentralized governance process, ensuring the stablecoin’s financial framework remains managed by the DAO.

The concept of Facilitators is introduced with the introduction of GHO. These facilitators, such as protocols or entities, can generate and burn GHO tokens up to a specified bucket size. The proposal combines two previously approved Facilitators, the Aave V3 Ethereum Pool Facilitator and the FlashMinter, with their initial parameters for approval.

The Aave V3 Ethereum Pool Facilitator will enable depositors to borrow GHO against their collateral held in the V3 Ethereum Mainnet Pool. The proposed initial parameters for GHO in the Aave V3 Ethereum Pool include a borrow rate of 1.5%, a bucket capacity of 100 million GHO, and a 30% stkAAVE discount rate.

The FlashMinter Facilitator, subject to community approval, will provide users with the ability to FlashMint GHO, allowing for efficient arbitrage and bolstering GHO’s peg maintenance. The FlashMinter Facilitator’s initial bucket capacity will be set at 2 million GHO, with no fees paid to the facilitator initially.

The proposal encompasses various actions, including the deployment of the GHO ERC20 token and transferring control over the smart contract to the Aave DAO, listing GHO as a borrowable asset on the Aave Protocol, enrolling the Aave V3 Ethereum Pool as the first Facilitator, deploying GhoFlashMinter and enrolling it as the second Facilitator, and configuring stkAAVE as the discount token for GHO’s borrow rate.

The Aave DAO is eagerly awaiting community input and approval to move forward with the launch of GHO, an initiative set to expand the Aave ecosystem and bolster the Aave DAO’s revenue streams.

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