A new competitor – The ecosystem Challenge has experienced significant growth in recent years. THE stablecoins have played a central role in this evolution by allowing users to protect themselves from volatility. The platform Aave has just deployed its in-house stablecoin (GHO) on the testnet.
Aave deploys its stablecoin (GHO) on the testnet
Aave is an iconic Ethereum lending protocol. strong of almost $7 billion in TVLAave is in the top 3 most important DeFi protocols.
Last July, the protocol Aave made headlines by revealing its desire to launch a stablecoin. Entitled GHO, this is a stablecoin indexed to the dollar by over-collateralization and insured by the collateral deposited on the protocol.
Finally, on February 9, the Aave teams announced the deployment of the GHO on the Ethereum Goerli testnet. An important first step before deployment on the mainnet.
Indeed, this deployment on testnet will allow users to test all of the mechanics related to GHO and will allow Aave’s teams to correct any fault that may be discovered.
In practice, the GHO can be minted by users in exchange for depositing collateral on Aave. Thus, a user deposit 1 ETH on Aave and obtains in exchange 1 aETH. He can use this collateral to generate GHO tokens, with a value lower than the value of the collateral.
When he wants to repay his loan, the user will return the GHOs and recover his collateral. The GHOs will be destroyed by the protocol.
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A fully decentralized stablecoin?
At StarkWare Sessions 2023, Stani Kulechov, the founder of Aave spoke about stablecoins.
According to him, the ecosystem needs no more over-collateralized stablecoins to come up with decent solutions. Indeed, most of the most widely used stablecoins (USDT, USDC, BUSD, etc.) are insured by centralizing players.
Also, some over-collateralized stablecoins are highly dependent on other centralized stablecoins, and create a point of failure.
However, there remains convinced that stablecoins will be at the origin of the democratization of cryptocurrencies.
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