AAVE Submits Proposal of ‘GHO’ Stablecoin Pegged to USD

• There will be no reserve factor for GHO interest payments.
• “Facilitators” have also been included as a notion in the plan.

DeFi protocol AAVE proposes the creation of GHO, a native collateral-backed stablecoin tied to the US Dollar. The company behind AAVE, Aave Companies, has up a proposal for a decentralized stablecoin. AAVE made the news in a recent blog post.

Option to Choose From Multiple Crypto Assets 

Users will be able to choose from a variety of crypto assets as collateral for the AAVE stablecoin. Stablecoins may be minted using the collateral given by AAVE users. Earnings will be generated while the assets are held as security.

The Ethereum mainnet will host GHO, a decentralized stablecoin. To mint GHO, users must first supply collateral at a specific ratio. Protocol burns the GHO of the user who returned the borrowed position.

There will be no reserve factor for GHO interest payments, which means that the AaveDAO treasury will receive all interest payments from GHO minters. “Facilitators” have also been included as a notion in the plan. GHO coins may be generated and burned without risk if this proposal is accepted. AaveDAAO will set GHO’s borrowing rates. It will be determined by the current market circumstances.

It is the expectation of the AAVE team that GHO will gain wider acceptance both inside and outside of the crypto community. According to the team, low transaction costs will also be available on L2s. It’s all about decentralization and over-collateralization for GHO. On the Aave protocol, it will be backed by a variety of collateral.

According to CMC, the Aave price today is $70.99 USD with a 24-hour trading volume of $332,064,966 USD. Aave is up 13.88% in the last 24 hours.

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