DeFi Aave project on Ethereum has posted a proposal to build a stablecoin called GHO. The stablecoin is not backed by liquid fiat assets, but it isn’t an algorithmic stablecoin like Terra’s UST either.
Aave Companies, the company behind the Aave DeFi protocol, has submitted to the Aave DAO community a proposal to create a stablecoin, named GHO. According to the information posted, the stablecoin will be a decentralized stablecoin pegged to USD and will be managed by the Aave DAO community.
This coin will have a similar operating mechanism as Maker’s stablecoin Dai (DAI). Users will need to deposit crypto assets as collateral to generate GHO, the collateral will still be profitable during the lockdown.
Aave DAO will benefit from receiving interest from GHO stablecoin borrowers. Aave founder Stani Kulechov stated:
“While GHO would be secured by the assets on the Ethereum market, the main vision for GHO is to pursue organic adoption via L2s to solve real life payment opportunities across the internet and on-ground.”
Mr. Kulechov also revealed that the development of GHO has been completed and is expected to conduct a security audit on July 11 by the Open Zeppelin audit unit. However, the stablecoin has only been proposed to the Aave DAO community and will need to be voted on before being accepted into the project.
This is the second-largest project announced by Aave in 2022, after the social network Lens Protocol.
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