The Aave decentralised finance protocol (DeFi) will indeed issue its own stablecoin following an overwhelmingly positive vote by its community on the forum. With over 99% of the vote, the implementation of the GHO is now in the hands of Aave’s Decentralized Autonomous Organization (DAO)
The GHO has been approved by the AAVE community
Aave’s proposal to create its own stablecoin, presented earlier this month by the project teams, seems to have found great interest among its community.
The community has given the greenlight for GHO The next step is voting on the genesis parameters of GHO, look out for a proposal next week on the governance forum https://t.co/ba4oK50Wb8
– Aave (@AaveAave) July 31, 2022
Following a 3-day vote that started on July 28 and ended yesterday, Sunday July 31, the creation of the token named “GHO” was validated with a very favourable majority of 99.99% of “Yes”.
As indicated in Aave’s tweet, a new proposal should appear later this week to determine, in coordination with the community’s opinion, how the token’s launch will be structured.
The GHO will be implemented through the Aave Improvement Protocol (AIP), with the Aave Decentralised Autonomous Organisation (DAO) now responsible for the stablecoin launch.
The community’s decision momentarily boosted the price of the AAVE token, which saw a rise of around 17% within an hour of the announcement, from $93 to just over $109.
AAVE token price from July 31 to August 1
The price of the token has come back down, however, currently standing at $98.6.
What will be the model of the GHO?
Defined as an “over-collateralised” stablecoin, the GHO will be minted from the assets deposited by users on the platform as collateral. At the same time, these assets will continue to generate returns for their depositors.
In order to ensure this over-collateralisation, a user wishing to obtain GHOs will have to deposit a higher value of cryptocurrencies than the amount of GHOs they wish to receive. In addition, GHOs will be automatically burned if a user of the protocol is liquidated.
For a fee, the loan of GHO tokens will directly benefit the AAVE community as the profits will be paid into the community treasury. The community treasury, which is focused on the growth of the protocol, currently stands at $208 million.
According to the proposal in the governance forum, a fixed interest rate will be applied to the GHO and it will also be added to a variety of cash pools so that it can be used by Aave users as part of their investment strategies.
This is the second major announcement this year for the Aave protocol, which previously launched its Lens social network in May. The decentralised finance platform itself has over $9.7 billion locked up.
