On July 31, 99 percent of the Aave community voted for the launch of the in-house stablecoin GHO. With this, it should now be certain that the lending platform will soon put its decentralized stablecoin into circulation, although the crypto sector had come under enormous pressure due to the disintegration of the Terra ecosystem.
As a result of the crash, centralized stablecoins such as USD Coin (USDC) and Binance USD (BUSD) gained in importance.
In the DeFi podcast “Bankless”, Aave founder Stani Kulechov highlights the main features and describes the stablecoin as the “first secured stablecoin in which you continue to earn income on your collateral at the same time”.
This means that GHO should be created decentrally by users and be over-secured in order to avoid a scenario like that of Terra (LUNA).
According to Kulechov, the token pegged to the US dollar should be used by the Aave community is controlled and also secured by various cryptocurrencies on the protocol. Distributed interest generated by the mining of GHO should not go to liquidity providers, but flow directly to the treasury of the Aave DAO.
How exactly the stablecoin should work in detail is shown in the explanation of the application in the Aave forum. More applications to vote on entry parameters are expected in the coming week, the head of the developer department at Aave announced on Twitter.
In the meantime, developers of the token plan to contact an IT security company to check the smart contract code. Since Aave also supports other blockchains in addition to Ethereum, it is conceivable that GHO will also appear on other smart contract platforms in the future.
In particular, GHO will be integrated into layer 2 scaling platforms such as Polygon, Optimism or Arbitrum to enable worldwide use for payments.
Kulechov sees potential for this in emerging countries battered by inflation, where the domestic currency is bypassed by payments with stablecoins. However, this still happens to a large extent via accounts on centralized crypto exchanges.
In the DeFi room there are already interested parties for GHO. Frax Protocol founder Sam Keizman suggested integrating GHO into the decentralized stablecoin exchange Curve Finance. This would provide liquidity at the start and a quick application in the wider DeFi cosmos.
The extent to which investors and DeFi users accept GHO is likely to remain exciting, as decentralized stablecoins are currently being viewed critically. With $6.7 billion in committed capital, Aave is the third largest DeFi platform. So there should not necessarily be a lack of range.
