ignificant crypto news: the Aave community is preparing to vote on the launch of their decentralized stablecoin, called GHO, on the Ethereum mainnet.
If the vote is approved, participants in Aave version 3 on Ethereum will be able to mint the GHO stablecoin using available collateral.
Below are all the details.
Ethereum’s mainnet may soon host Aave new stablecoin: all the crypto news
Aave Companies, a major contributor to Aave’s DeFi lending protocol, has submitted a proposal to launch the decentralized GHO stablecoin as an ERC-20 token on the Ethereum mainnet.
The proposal aims to introduce GHO via facilitators, allowing Aave version 3 (V3) users to mint GHO using their collateral, as outlined in Aave’s enhancement proposal.
Aave Companies said that if approved, the introduction of GHO will make stablecoin lending on Aave more competitive and generate additional revenue for the DAO. In fact, the DAO treasury will receive 100% of the interest payments from GHO loans.
In addition, the Aave DAO will have the power to adjust the GHO interest rate through a decentralized governance process.
All discussions regarding the Aave proposal
Currently, the proposal is under review and voting will begin later today, concluding on 14 July.
The proposed launch follows extensive discussions within the community through several governance phases and months of testing on Ethereum‘s Goerli testnet.
The proposal involves the use of two previously approved facilitators, the Aave V3 Ethereum Pool Facilitator and the FlashMinter Facilitator, to generate and burn GHO tokens.
The Aave V3 Ethereum Pool Facilitator will allow users to borrow GHO using collateral deposited in the Aave V3 Ethereum mainnet pool.
On the other hand, the FlashMinter Facilitator will allow users to flash GHO without requiring collateral, provided that repayment is made in a single transaction.
This would improve the efficiency of arbitrage and enable GHO to maintain its peg more effectively.
The proposal also includes a plan to use Staked Aave tokens (stkAAVE) as a mechanism to reduce the cost of borrowing for GHO stablecoin users. As a reminder, stkAAVEs represent a stake version of the Aave token.
In addition, Aave Companies is considering a multi-chain strategy following the proposal to launch GHO on Ethereum.
What does Aave enhancement proposal say?
“After extensive community discussion, multiple steps in the Aave DAO governance process and months of testing on Ethereum’s Goerli Testnet, this AIP proposes the introduction of GHO on Ethereum Mainnet with Aave V3 Facilitator and FlashMinter Facilitator.”
On Aave’s official page, this is how their proposal for this new launch begins. With respect to the above, we see that the Aave website also explains that GHO, the decentralized stablecoin, introduces the concept of Facilitators.
Facilitators, as protocols or entities, have the power to generate and burn GHO tokens up to a specific bucket limit.
The current proposal combines two previously approved Facilitators, the Aave V3 Ethereum Pool and the FlashMinter, along with their initial parameters submitted in the AIP for approval.
After intense discussions within the community, the initial parameters for GHO’s Aave V3 Ethereum Pool Facilitator passed TEMP CHECK with 440,000 votes in favor of Option A.
Option A proposes the following parameters for the launch of GHO in the Aave Ethereum V3 Group: Loan rate: 1.5%; Bucket capacity: 100 M GHO; Discount rate stkAAVE: 30%.
Hence, if this AIP is approved by the community, GHO will be launched with the above parameters for this Facilitator.
On the other hand, as we anticipated, in case of community approval, at the time of launch, GHO will be equipped with a second facilitator.
The FlashMinting will offer the same functionality as a Flash loan, but instead of borrowing resources from a pool, users will be able to repay the entire amount in one transaction.
According to the data, the TEMP CHECK approving the FlashMinter Facilitator and its parameters received 679,000 votes in favor.
As a result, the community agrees that the Bucket capacity of the FlashMinter Facilitator will be 2,000,000 GHO and that there will be no fees for the Facilitator.
In the early stages, GHO’s ability to maintain its anchor will be enhanced by low fees that further incentivize arbitrage.