The decentralized finance protocol Aave recently launched its new stablecoin GHO on the Ethereum blockchain. Stablecoins are growing in popularity in the cryptocurrency space, and the GHO stablecoin is no exception. So far, more than $2.5 million worth of GHOs are outstanding.
Aave launches GHO: a decentralized and over-collateralized stablecoin
Aave announced the launch of the new stablecoin in a blog post dated July 15, describing it as an asset “decentralized and over-collateralized”. This stablecoin is backed by a “multitude” of digital assets, including the native cryptocurrency ofEthereum (ETH)Currently valued at $1,915as well as the native token Aave (AAVE) whose value is $75.84.
The launch of GHO on the mainnet took place after a community governance vote, in which nearly 100% of the 424 participating addresses voted in favor of the new stablecoin.
Aave responds to the lack of transparency of stablecoins
Unlike centralized stablecoins such as Tether’s USDT, which have come under fire due to an apparent lack of transparency regarding their reservations, the assets supporting GHO are transparent and verifiable, and can be confirmed through blockchain data, according to Aave.
“All transactions are made through self-executing smart contracts, and all GHO transaction data is available and verifiable directly on the blockchain or through numerous user interfaces,” Aave wrote.
Additionally, Aave said GHO revenue will further bolster its DAO (Decentralized Autonomous Organization) treasury, with governance entrusted to token holders AAVE and stkAAVE.
The launch of GHO adds to the growing list of DeFi-native algorithmic stablecoins. On May 4, the protocol DeFi Curve launched its flagship algorithmic stablecoin, crvUSD.
At the time of publication, MakerDAO’s stablecoin DAI, based on ethereumis the largest algorithmic stablecoin in circulation, with a market cap of $4.281 billion.
However, the stablecoin market remains largely dominated by centralized issuers such as Tether And Circle.
Tether’s USDT and Circle’s USDC dominate the USD stablecoin market
Currently, stablecoins USDT from Tether and USDC from Circle account for a dominant share of 87% of the total circulating supply of all US dollar-backed stablecoins. Indeed, Tether’s USDT holds an impressive circulating supply of 84.12 billionwhile Circle’s USDC reaches 25.47 billion.
At the time of publication, GHO is trading slightly below the desired parity of $1at $0.9903 according to data from CoinMarketCap.
Stablecoins have become popular as digital alternative to traditional fiat currencies. They provide value stability while leveraging blockchain technology. Ethereum-based stablecoins, like DAI, USDT, and GHO, take advantage of the security and liquidity offered by Ethereum.
As the stablecoin market evolves, new innovations improve transparency, stability and trust in these digital assetsopening new avenues for the widespread adoption of cryptocurrencies in everyday transactions.
Sources: The Block, Cointelegraph