Aave, a reputed DeFi protocol, is now introducing a new algorithmic stablecoin called GHO.
The proposal to introduce GHO was made on 7 July 2022, after which it was sent to Aave DAO—the governance body concerned—for approval. Aave DAO finally gave the plan a unanimous nod on 31 July 2022. As part of the three-day voting process, 5,01,000 AAVE tokens were received in favor of the proposal.
Now that the vote has passed, the next step of creating the GHO stablecoin will involve the implementation of the AIP (Aave Improvement Protocol), a token creation standard. The Aave DAO will be in charge of administering the stablecoin upon release.
What does the launch of GHO mean?
At the launch, Aave’s founder Stani Kulechov said that the aim is to drive DeFi adoption on Ethereum’s Layer-2 solutions.
The GHO stablecoins will be yield generating, can be used to solve payment issues, and will be deployed as collateral for on-ground and online assets.
GHO is expected to function as an overcollateralized stablecoin. That means the crypto to GHO ratio will not be 1:1. But the exact collateral economics is yet to be released.
With the upcoming stablecoin, Aave will soon join the elite list of stablecoin issuers, including MakerDAO.