Aave has successfully launched GHO, an algorithmic stablecoin pegged to the US dollar, on the Ethereum mainnet. The launch follows a positive response from its community of users on its proposal for developing the token.
Let’s GHO! Congrats to the @AaveAave community on the Mainnet Launch. https://t.co/vI7JbMLYb4
— GHO (@GHOAave) July 15, 2023
In a blog post on July 15, 2023, Aave introduced GHO as a decentralized and over-collateralized asset supported by a diverse range of digital assets, including Aave and Ethereum native tokens.
The DeFi protocol claimed that the development of the stablecoin aligns with Aave’s mission to create a people-powered financial ecosystem accessible to all.
GHO was officially deployed on the Ethereum mainnet after a community governance vote involving 424 participating addresses, with an overwhelming majority voting in favour of the new stablecoin.
According to Etherscan analysis, the protocol has minted 3.041 million GHO coins at the time of filing this report. CoinMarketCap data indicates that the current price of GHO stands at $0.9844.
One of the notable features of GHO is its transparent and verifiable nature. Unlike centralized stablecoins such as Tether’s USDT, all GHO’s supporting assets can be observed and confirmed through on-chain data.
Also, all GHO transactions are facilitated by self-executing smart contracts, and transaction data are readily accessible and auditable directly from the blockchain and various user interfaces.
The Aave DAO, which comprises holders of AAVE and stkAAVE tokens, manages the governance of GHO under the Aave protocol. They have the authority to make decisions regarding the stablecoin’s total supply, minting caps, and the selection and management of Facilitators.
The DAO is also tasked with establishing and adjusting interest rates and managing the risk thresholds for the stablecoin.
Aave outlined that the earnings generated by GHO will contribute to strengthening its DAO treasury. The interest earned from borrowing activities is directed to the DAO and will be used to strengthen its treasury instead of being sent directly to asset suppliers.
GHO joins the growing number of DeFi-native algorithmic stablecoins in the market. Another notable example is crvUSD, the principal algorithmic stablecoin introduced by the DeFi protocol Curve on May 4, 2023.
According to DefiLlama data, MakerDAO’s Ethereum-based stablecoin DAI holds the top position as the largest algorithmic stablecoin in use, with a market valuation of $4.28 billion.
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