Aave has submitted a proposal to launch the GHO stablecoin on the Ethereum mainnet, marking a major milestone for the DeFi protocol. Following rigorous testing and governance procedures, Aave aims to establish GHO as its native token.
Chinese crypto-reporter Colin Wu brought the recent development to public attention in a tweet on June 7.
He decision to launch GHO stems from extensive community deliberation and voting by Aave DAO. Once GHO is officially released, Aave V3 users can leverage their Ethereum collateral to borrow from GHO. In particular, all interest payments associated with the GHO loans will be funneled into the DAO treasury, thus increasing revenue streams for Aave DAO.
To ensure the stability of the protocol and mitigate potential losses, the DAO treasury collects fees from various sources and uses them to strengthen security through the Aave security module. Additionally, treasury allocates funds for protocol development and innovation through Aave Grants DAO, a community-led grant program.
The introduction of GHO will empower the DAO to exercise governance control over the interest rates attributed to GHO, thus maintaining the principle of decentralization within its financial framework. After launch, GHO will have two enablers: Aave V3 Ethereum Pool and FlashMinter.
The release of GHO is contingent on final approval from the Aave DAO, which will be obtained via an Aave Enhancement Request (AIP) after receiving community feedback via this Aave Request for Comment (ARFC). If the proposal is approved, GHO will be fully operational on the Ethereum Mainnet.
Following the release of GHO, the Aave community intends to present a multi-chain strategy, urging the implementation of GHO on various alternative networks such as Polygon, Avalanche, Arbitrum, Optimism, and more. This strategic expansion will enhance GHO’s reach and utility in various ecosystems and markets.
