The Aave community, the driving force behind the leading DeFi money market, is rallying behind a governance proposal that aims to introduce the highly anticipated GHO stablecoin on the Ethereum mainnet. With unanimous support from token holders and meeting the required quorum, the proposal holds promising prospects for Aave v3 users.
Once approved, Aave v3 users will gain the ability to mint GHO by leveraging their Ether deposits at an attractive annual interest rate of 1.5%. Furthermore, users staking the AAVE token will enjoy a 30% discount on their GHO minting fees. This incentivizes active participation and engagement within the Aave ecosystem.
The generated interest payments from GHO will be directed to Aave’s treasury, ensuring a sustainable revenue stream for the protocol. Additionally, the Aave DAO holds the power to adjust GHO’s interest rate in the future, ensuring adaptability to market dynamics.
The proposal, which has undergone extensive community discussions, multiple phases of the Aave DAO governance process, and months of testing on Ethereum’s Goerli Testnet, aims to bring GHO to the Ethereum Mainnet. It highlights the community-driven approach and meticulous planning behind Aave’s developments.
In recent weeks, the AAVE token has showcased exceptional performance, outpacing ETH with a notable 45% surge in the past month. As the second-largest DeFi protocol, Aave boasts a significant $5.9 billion in total value locked (TVL) across eight networks, as reported by DeFi Llama.
This proposal aligns with the broader trend in the stablecoin sector, where Curve, the sixth-ranked DeFi protocol with $3.8 billion in TVL, has found success with its native stablecoin, crvUSD. Both GHO and crvUSD are stablecoins minted against deposits within their respective protocols.
The stablecoin sector has recently faced challenges, including the failure of Terra’s UST and regulatory scrutiny surrounding Paxos’s issuance of Binance USD. Moreover, concerns over DAI’s collateralization and USDC’s market cap decline after depegging have raised further apprehensions.
Since its launch in May, crvUSD has witnessed approximately $80 million in borrowing activity, positioning it as the 20th-largest stablecoin according to CoinGecko. Moreover, crvUSD ranks 12th among stablecoins in terms of trading volume, with approximately $4.7 million worth of trades.
Curve initially supported only liquid staking tokens as collateral, but has since expanded its support to include wBTC and native Ether, diversifying its offerings to attract a wider user base.
As Aave and Curve venture into the stablecoin sector, they aim to leverage emerging opportunities while addressing the shortcomings witnessed within the broader market. The launch of GHO represents an important milestone in Aave’s evolution and reinforces its commitment to empowering users within the decentralized finance landscape.
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