Aave Submits Proposal to Create Native Stablecoin GHO
- DeFi platform Aave proposes to create GHO, a native decentralized stablecoin backed by diverse crypto assets. Decisions regarding GHO would be left to the Aave governance.
DeFi giant Aave has disclosed plans to launch its native stablecoin dubbed GHO. The company announced on Thursday that it has submitted the launch proposal to the DAO to vote.
“We have created an ARC [Aave request for comments] for a new decentralized, collateral-backed stablecoin, native to the Aave ecosystem, known as GHO,” the company noted.
In a bid to enhance its ecosystem and the DeFi space at large, Aave protocol has decided to dive into the stablecoin industry.
Key Features of GHO Stablecoin
According to the announcement, GHO will be pegged to the US Dollar, while featuring as a native decentralized, collateral-backed stablecoin. The proposal demands that the coin be launched on the Aave protocol, therefore giving room for community users to mint GHO against the collaterals they supply.
Meanwhile, decisions regarding the protocol would be left to the Aave governance. The proposed design will allow GHO to be backed by a diversified set of crypto assets. Interestingly, the choice will be made at the discretion of the user. The protocol will not restrict borrowers from earning interest on their underlying collateral.
The new development reflects the company’s commitment to enhancing the DeFi space. It is seeking to provide the industry with a fast, transparent, efficient, borderless, and stable way to transfer value on the blockchain via the launch of its decentralized multi-collateral stablecoin that is fully backed and native to the Aave Protocol.
While the company awaits approval for the proposed GHO debut, it believes that the project would make the borrowing of stablecoin more competitive on the Aave Protocol. Furthermore, stablecoin users will now be able to enjoy more options. It will also generate additional revenue for the Aave DAO by sending 100% of interest payments on GHO borrows to the DAO.
According to the company, GHO will be deploying a new mechanism dubbed the concept of Facilitators. This concept will provide it with the ability to trustlessly generate (and burn) GHO tokens.
The facilitator could be a protocol, an entity, and the like. The Aave governance will control the approval of any facilitator to be used on the coin. The protocol will provide the various facilitators the ability to apply different strategies to their generation of GHO.
Aave’s Performance
Considering the current performance of the protocol amid the recent market crisis, the platform appears to be surviving the market crash.
Thus, it may be deemed fit to carry on with its intention to launch a decentralized stablecoin. According to data from CoinGecko today, AAVE price has seen a decent upward trend of upto 9.8 percent in the last 24 hours. The asset is priced at $69.44 as of publication time with a market capitalization of approximately $959 million.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
