Aave DAO Community Approves Stablecoin Named GHO

Aave (a decentralized lending platform) has recently presented a proposal to the DAO for the construction of an exclusive stablecoin called GHO. The community has given a go-ahead signal for the respective proposal, permitting the Aave Protocol to launch GHO and the consumers to mint the uniquely launched stablecoin against the supplied collaterals.The declaration for the launch of the new stablecoin was made on the behalf of the Aave Companies (the organization providing support for the Aave protocol) on 7th July.

The Proposal of Aave DAO for GHO Stablecoins Accepted by the Community

As per the governance proposal, the status of GHO would be that of a decentralized stablecointhat would operate on the Ethereum blockchain and would be pegged to the United States dollar. The consumers who intend to acquire GHO would require minting the token against the collateral deposited by them. Nonetheless, the details about thelist of compatible collateralized assets as well as the ratio of collateral have not yet been provided by the venue.

As the respective stablecoin is fundamentally borrowed by the consumers in return for their holdings, there would be a requirement for the position to be overcollateralized according to any usual Aave loan.The company mentioned that a list of diversified crypto assets would back GHO, whereas the interest would continuously be provided to the borrowers on their core collateral.

GHO to Provide Additional Opportunities to the Users

In the proposal, it was noted that the entirety of the interest payments accumulated on the behalf of the people minting GHO would be straightly transacted to the treasury of AaveDAO, instead of the regular reserve factor gathered when the other assets are borrowed by the customers. The staked AAVE token’s (stkAAVE) holders would additionally be benefitted from the adoption of the stablecoin, for being allowed to borrow as well as mint GHO tokens at a reduced rate.

StaniKulechov – the founder of Aave – posted on his official Twitter account that the venue’s team has a wider range of possibilities in the case of a USD-pegged stablecoin via GHO.He added that the assets will be utilized to secure GHO on the market of Ethereum.

According to him, GHO’s chief vision is to have an organic adoption through L2s to deal with the normal payment facilities throughout the internet.The data shared by DefiLlama categorized Aave as the 2nd biggest DeFi venue with $6.76B worth in total value locked (TVL).