Aave has launched its algorithmic stablecoin, GHO, backed by multiple crypto assets including ethereum (ETH). GHO will be an alternative to DAI, a stablecoin minted by MakerDAO.
Aave’s GHO is live
After more than a year in development, Aave, the world’s second largest decentralized finance (DeFi) protocol, has launched GHO (pronounced “go”), an overcollateralized decentralized algorithmic stablecoin on Ethereum.
On July 15, Aave said that DeFi market participants could mint the GHO stablecoin by depositing collateral assets backed on the Aave V3 Protocol on Ethereum.
Unlike popular stablecoins like tether (USDT), which are issued by centralized entities, the GHO algorithmic stablecoin will be issued and managed by AaveDAO, a decentralized autonomous organization.
Corresponding with Bloomberg, Stani Kulechov, founder and CEO of Aave, said that the revenue generated by GHO will be allocated to the project’s community contributors, including security experts, developers and others.
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The Aave team says that all GHO transactions will be handled by self-executing smart contracts, with transaction data, reserves, and other key information about the stablecoin verifiable on-chain, underscoring the transparency of the project.
Crypto, DeFi and stablecoins
Despite the transparency that decentralized stablecoins offer, their centralized counterparts still dominate the market. The collapse of UST, a Terra algorithmic stablecoin project last year, demonstrated that so-called decentralized stablecoins are not immune to the risks of manipulation and decoupling.
MarkerDAO’s DAI, which managed to recover from an unpegging event in March, is the world’s largest algorithmic stablecoin, with a market capitalization of $4.27 billion.
At the time of writing, GHO is trading at $0.993870 with a total supply of 2,267,933 GHO, according to CoinGecko.
It remains to be seen if Aave’s GHO stablecoin will gain traction and potentially outperform DAI or USDT.
