Aave DAO to release GHO steblecoin

Despite the collapse of the UST project and tighter regulation Aave DAO, the protocol’s governing body Aave DeFi voted in favour of the proposal to create a new stablcoin.

According to the voting page, DAO members with 501,000 AAVE tokens almost unanimously supported the proposal, 99.99% in favour of a stable coin issue.

The next step will be to develop and issue using the new Aave Improvement Protocol (AIP) stabelcoin. Once launched, the Aave DAO will act as issuer and manage the GHO stablecoin.

Aave users wishing to create a GHO will be able to do so by providing any of the assets accepted as collateral on the platform. In addition to collateral, the deposits must generate income for Aave. The protocol will take interest on loans in GHO stabelcoins taken out by borrowers.

The Aave team plans that GHO will have excess collateral, similar to MakerDAO’s DAI stabelcoin. That is, the value of the deposited cryptocurrency will exceed the number of GHO tokens issued.

Aave founder Stani Kulechov has previously stated that the project will facilitate the organic adoption of GHO on the second tier of Etherium. By creating a stabelcoin, Aave will join DeFi’s select group of stabelcoin issuers along with MakerDAO.

The GHO Stablecoin is created based on the Etherium blockchain, with a link to the US dollar and collateral at the user’s discretion. To get GHO, a stablecoin must be issued against its asset.

The Aave team announced the launch of the GHO stablecoin in early July. Voting began on July 28 and ended on the 31st. However, International Monetary Fund (IMF) capital markets director Tobias Adrian said this month that unsecured and algorithmic stablocoins are in trouble, and the USDT stablocoin backed by the US dollar is no exception.