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Aave DAO votes for in-house stablecoin

On July 31, 99 percent of the Aave community voted to launch the in-house stablecoin GHO. It should now be certain that the lending platform will soon be launching its decentralized stablecoin, even though the crypto sector has come under enormous pressure from the decay of the Terra ecosystem.

In the aftermath of the crash, centralized stablecoins like USD Coin (USDC) and binance USD (BUSD) in importance.

In DeFi podcast “Bankless,” Aave founder Stani Kulechov highlights the key features, describing the stablecoin as the “first over-collateralized stablecoin where you continue to earn income on your collateral at the same time.”

This is intended to allow GHO to be created decentrally by users and to be secured in order to avoid a scenario such as that of Terra (LUNA).

According to Kulechov, the token linked to the US dollar will be issued by the Aave community controlled and also secured by various cryptocurrencies on the protocol. Distributed interest that arises from the mining of GHO should not go to liquidity providers, but flow directly to the treasury of the Aave DAO.

How exactly the stablecoin should work in detail is shown in the explanation to the application in the Aave forum. Further requests to vote on entry parameters are expected in the coming week, announced the head of the development department at Aave Twitter.

In the meantime, developers of the token plan to contact an IT security company to check the smart contract code. Since Aave also supports other blockchains in addition to Ethereum, it is conceivable that GHO will also appear on other smart contract platforms in the future.

In particular, GHO is to be integrated into Layer 2 scaling platforms such as Polygon, Optimism or Arbitrum to enable global use for payments.

Kulechov sees potential for this in emerging markets shaken by inflation, where the domestic currency is bypassed by payments with stablecoins. However, this still happens to a large extent via accounts on centralized crypto exchanges.

In the DeFi space there are already interested parties for GHO. Frax Protocol founder Sam Keizman suggestedto integrate GHO with decentralized stablecoin exchange Curve Finance. This would provide liquidity at the start and a quick application in the wider DeFi cosmos.

The extent to which investors and DeFi users accept GHO should remain exciting, as decentralized stablecoins are currently being viewed critically. With $6.7 billion of committed capital, Aave is the third largest DeFi platform. So there shouldn’t necessarily be a lack of range.

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