Crypto

Aave DAO Approved Creating GHO Stablecoin

The GHO stablecoin will be supported by over-collateralized assets that continue to earn yield

According to Aave, the proposal from Aave Companies, was approved by the majority of the voters in Aave DAO (99.9%). The voters have pledged $500K AAVE in approving the measure to create (GHO) which is a stablecoin backed by collateral consisting of other cryptocurrencies.

The community has given the greenlight for GHO The next step is voting on the genesis parameters of GHO, look out for a proposal next week on the governance forum.

Aave is nothing but a decentralized protocol, which allow users to lend and borrow cryptocurrencies. However, the users can gain their passive income on digital assets while providing liquidity to the cryptocurrency market. Aave is also an open-source and has a $9.8 billion in liquidity.

The users who are waiting for GHO, will need first to deposit cryptocurrencies accepted by Aave. Moreover, the users who borrow GHO against crypto assets will be able to earn interest on the underlying collateral used to mint the stablecoin. However, the lending protocol will apply an interest on loans taken out in GHO, with payments going back to the Aave DAO.

Aave stated that the deposits users to mint GHO must be more than the GHO value they receive, which means that the loan will be collateralized overly. The GHO lent will be burned from the protocol once the users repay a borrowing position or are liquidated.

Despite the stablecoin approval, the introduction of GHO will take time as it’s created through an Aave improvement protocol (AIP), as the Aave DAO is responsible of supervising the stablecoin’s distribution once its creation has been vetted.

According to CoinMarketCap, most of the stablecoins’ market cap is currently over $153B, and it is mainly consist of Circle’s USDC and Tether’s USDT.

The new stablecoin will be pegged the U.S. dollar, and it will be supported by multiple cryptocurrencies that user can already deposit. Moreover, the interest rate will be determined by the Aave DAO.

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