The GHO algorithmic stablecoin is pegged to the US dollar and is backed by various digital assets.
Decentralized finance (DeFi) protocol Aave has launched its GHO stablecoin on the Ethereum mainnet. The launch, which appears to have been well-received, saw the circulating supply of the stablecoin rapidly increase by $1.5 million within 24 hours of launch. However, as of publication, more than $2.19 million has been minted in GHO.
The launch came shortly after an interesting community governance vote, in which almost all 424 participating addresses voted in favor of the new stablecoin.
Aave to capitalize on the transparency of reserves
According to Aave advertisement, the GHO algorithmic stablecoin is pegged to the US dollar and is backed by various digital assets. Notably, its reserves include Ethereum’s native coin Ether (ETH) and Aave’s native token AAVE.
It is worth mentioning that centralized stablecoins like Tether (USDT) continue to come under fire. And most of the criticism generally borders on what appears to be a lack of transparency around their reservations.
However, Aave has moved to build on this key area of transparency with the GHO. To this end, the protocol highlighted that all assets supporting the GHO stablecoin are fully verifiable and transparent, even as on-chain data can confirm it. Aave wrote in part:
“All data related to GHO transactions is available and auditable directly from the blockchain or through numerous user interfaces.”
GHO Stablecoin Adds to Growing Ranks of Algorithmic Stablecoins
By all indications, it may appear that DeFi-native algorithmic stablecoins are gradually growing up the ranks.
For what it’s worth, MakerDAO’s DAI is arguably the first and foremost choice among algorithmic stablecoins right now. At press time, the Ethereum-based stablecoin has a market capitalization of $4.28 billion, according to DefiLlama. data.
In addition, there are other prominent algorithmic stablecoins, including Frax, Ampleforth, and the rest. But the most recent addition was when DeFi protocol Curve also launched its flagship crvUSD algorithmic stablecoin in May.
However, despite this growing trend, it should be noted that the overall stablecoin market is still dominated by centralized issuers. That is Tether (USDT) and Circle (USDC). The duo alone accounts for at least 87% of the total circulating supply of all US dollar-pegged stablecoins.
However, with Aave’s GHO, algorithmic stablecoins are also gradually emerging. At press time, GHO is trading slightly below the desired parity of $1 at $0.9898. Although it fell to $0.9814 on July 16, according to CoinMarketCap data.
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Mayowa is a crypto enthusiast/writer whose conversational nature is quite evident in his writing style. He strongly believes in the potential of digital assets and takes every opportunity to reiterate it. He is a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from cryptocurrency, however, Mayowa’s imagined distractions include soccer or discussions of world politics.
