Aave, the Decentralized Finance (DeFi) giant, has officially revealed that it is planning to launch GHO, an decentralized algorithmic stablecoin. As of now, it is awaiting the approval of the community DAO (Decentralized Autonomous Organization). With this impending launch, it looks forward to enhancing its lending platform’s features.
It is yet to be seen whether this stablecoin will succeed or join the list of its failed predecessors in an already crowded marketplace.
Being native to the Aave ecosystem, the overcollateralized stablecoin will initially be accessible on the Ethereum (ETH) network. Whether or not it will be available on other blockchains supported by Aave depends on future community votes.
As per the proposal shared, GHO will be a decentralized, Ethereum-based stablecoin that would be pegged to the US dollar. It can be collateralized with several assets depending on the choice of users.
Users who want to get GHO would have to mint it against the collateral they have deposited. However, the team is yet to provide details on the list of the collateral ratio and the collateralized assets that are supported.
The launch of GHO would increase the competitiveness for borrowing stablecoins on the Aave protocol. It would also give more options for users of stablecoin. Further, it will generate extra revenue for the DAO through 100% interest payments on the stablecoin borrows.
GHO would work like the other algorithmic stablecoins that mint tokens worth a dollar when users give cryptocurrency worth one dollar. However, users must provide collaterals at a set collateral ratio so that they can mint GHO.
