In recent news, the Aave protocol’s decentralized autonomous organization (DAO) has put forth an Aave Improvement Proposal (AIP). The governance proposal seeks Aave DAO to vote for the launch of its native stablecoin $GHO, pronounced as ‘go’, on Ethereum mainnet. DAO community members have started voting to express either their support or refusal of this stablecoin deployment.
The exciting news was shared on the official Twitter handle of Aave protocol on July 11, Tuesday. Aave’s founder, Stani Kulechov, took to Twitter and retweeted the original Aave post to share the information. “Ready to GHO?” Kulechov stated, adding “Over a year of work is now up for the governance to vote whether to activate the Aave native, overcollateralized GHO minting on Aave Protocol.”
ready to GHO? Over a year of work is now up for the governance to vote whether to activate the Aave native, overcollateralized GHO minting on Aave Protocol 👻 https://t.co/85JbD8Oo0c
— Stani.lens (🌿,👻) (@StaniKulechov) July 10, 2023,
Aave (Finnish word for ‘ghost’) is a Decentralized Finance (DeFi) protocol that allows users to lend and borrow digital assets. The platform works without oversight from a third party and enables its users to easily earn yields or take out crypto loans. With a robust DAO governing the system through proposals and votes, the Aave Network has been revolutionizing the DeFi space since its inception.
Aave Introduces GHO on Ethereum with Different Facilitators
The AIP seeks to accomplish GHO’s launch on Ethereum through two initial facilitators, Aave V3 Ethereum Facilitator, and the Flashmint Facilitator. These facilitators can either be entities or protocols that mint and burn GHO tokens in a trustless manner.
The V3 Ethereum market pool will serve as the first facilitator owing to its extensive risk-mitigation features. It mainly allows users to lend GHO tokens against the assets they have deposited to the platform as collateral. On the other hand, Flashmint Facilitator, a variant of flash loans, will enable efficient arbitrage.
If the proposal gets approved it will result in a highly plausible scenario considering the affirmative stance of voters on the forum, “GHO will become live on the Ethereum Mainnet.” Currently, the voting results indicate that AIP is backed by a majority of over 99.9% of voters while even less than 0.01% of DAO members have voted against it.
Aave protocol uses AAVE tokens for utility and governance purposes, however, last year Aave introduced its network’s collateralized stablecoin, GHO. After its deployment, GHO will be pegged to the U.S. dollar and users can mint it by using a “diversified set of crypto assets.” Moreover, just like in conventional lending cases, the GHO holders will continue to receive interest on their supplied collateral amount.
Rather than being a new development, AIP is a culmination of efforts Aave and its DAO community have made to achieve widespread adoption of GHO. This proposal passed through extensive DAO community discussions and was tested in several phases of the DAO governance process.
Recently, in February 2023, GHO was deployed on Ethereum’s Goerli testnet before being audited by multiple blockchain-auditing firms (e.g., SigmaPrime, Certora). Since its release, GHO has been working effortlessly on the testnet without encountering any major bugs and security vulnerabilities.
The proposal states that, if approved by the Aave DAO, “the introduction of GHO would make stablecoin borrowing on the Aave Protocol more competitive.” Moreover, it will ”generate additional revenue for the Aave DAO by providing to the DAO treasury 100% of the interest payments on GHO borrows.”
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2023/07/15/aave-dao-proposes-to-launch-stablecoin-gho-on-ethereum-mainnet/