The launch of the new stablecoin GHO was approved almost unanimously by holders of AAVE, the governance token for the Aave protocol. Out of the holders who participated in the vote, over 99% voted in favor of the launch. This demonstrates strong support from the Aave community for introducing the new stablecoin.
The Aave decentralized autonomous organization (DAO) governs the GHO stablecoin. The DAO is responsible for setting and changing the maximum supply, interest rates, and limits on how much GHO that approved entities can mint. The DAO also determines risk factors and approves entities, called Facilitators, that are authorized to mint new GHO coins. Facilitators are protocols or organizations that mint GHO after being approved by the Aave DAO.
In the final governance vote, 421 wallets containing 881,059 AAVE tokens in total voted to approve the GHO launch, while only 3 wallets with 10 AAVE tokens total voted against it. This means the launch was approved with near unanimous support. GHO is now active on Aave’s V3 platform, where users can mint new GHO by supplying other cryptocurrencies like AAVE, ETH, and stablecoins as collateral.
Since GHO is an overcollateralized stablecoin, the total value of the collateral that is staked to mint new GHO coins is much higher than the value of the GHO currently in circulation. This over-collateralization helps ensure the stable value of GHO.
According to an official announcement at the time of launch, Aave V3 is allowed to mint a maximum of 100 million GHO coins in its role as a Facilitator. So far only 2.5% or 2.5 million GHO have been minted. The decentralized Aave organization can increase this minting limit in the future through another community vote if needed.
Collateral supplied to Aave V3 keeps earning rewards, and interest paid for borrowing GHO goes to the Aave treasury. Also, users who provide AAVE tokens to insure the GHO stablecoin can buy GHO at a discounted price.
#Stablecoin #AAVE #GHO #Ethereum
