It has been almost a month now that there has been talk of an Aave stablecoin. In the meantime, the community, in the form of the Aave DAO, has decided in favor of such a. The course is extremely attractive.
There will be a new, fully decentralized stablecoin! On Sunday, the Aave DAO opted for the new coin called GHO with a majority of 99.99 percent. The company is competing against big players such as Tether, Circle or Curve in the highly competitive currency competition.
The in–house Aave Coin did all the reporting around the stablecoin pretty well – it was able to gain about 70 percent in the last month, so that the price was even several times above the $ 100 mark. For investors, the time may prove to be particularly favorable, since the price was at the all-time high in May 2021 at around 600 US dollars.
The company now has a market capitalization of $ 1.5 billion and a total value locked (TVL) of $ 4.75 billion. This puts Aave in the list behind well-known competitors such as MakerDAO, Lido, Uniswap and Curve. The latter company even caught the attention a few weeks ago with the announcement of a stablecoin.
“The community has given the green light for the GHO-Coin. The next step is to vote on the Genesis parameters of the GHO.”
Aave can announce this via the official Twitter account. There is an article in the Aave blog that explains more about the coin. “The GHO is secured via a basket of cryptocurrencies, with lenders depositing crypto continuing to receive interest on the collateral,” the article says. So if an investor decides to deposit a crypto security in the basket, he will receive interest on it.
Stablecoin finds high level of approval
The community voted for a GHO coin with an incredible 99.99 percent of all votes. The fact that this ultimately benefits the DAO is a nice “side effect”.
“The community has been immensely helpful with their feedback.”
Aave lists a whole range of information that came from the community. As a result, the team came to the realization that it needs to deal with interest rates, caps and a value-preserving mechanism for the stablecoin.
AAVE: A picture of BeInCrypto.com
The interest generated by borrowing with the GHO is distributed in full to the DAO and controlled by the Aave governance.
For example, if a user repays his borrowed GHO or is liquidated, then the stablecoins are all born again (deleted). All interest then goes directly to the DAO.
USDT, USDC, DAI and Curve – A Competitive Market
Aave joins a $153 billion ecosystem with the stablecoin. Tether (USDT) leads the market narrowly ahead of Circle’s USDC with a market capitalization of $68 billion. USDC, in turn, brings it to $ 55 billion. Tether in particular is repeatedly criticized for its low cash reserves of 5 percent.
The competitors DAI and BUSD together only bring it to around 20 billion US dollars, whereby DAI (from MakerDAO) is considered a direct competitor to Aave.
The DAI stablecoin works similarly to the planned GHO in terms of decentralization: an over-hedging with a basket of cryptocurrencies is intended to secure the value in the event of a crash, so that even with a corresponding depreciation of the deposited cryptos, there is enough liquidity for offsetting purchases on the market. However, in addition to Aave, Curve also recently announced that it would be sending a decentralized coin into the race.
It remains to be seen whether Aave will be able to prevail as the fifth largest DeFi protocol against the giants MakerDAO and Curve.
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