Aave, a decentralized finance (DeFi) protocol, has launched its algorithmic stablecoin called GHO on the Ethereum mainnet. GHO is pegged to the United States dollar and is backed by a variety of digital assets, including Ether (ETH) and Aave’s native token, AAVE. The stablecoin has been designed as a decentralized and over-collateralized asset, with its reserves being transparent and verifiable through on-chain data.
The launch of GHO followed a community governance vote, where an overwhelming majority of participating addresses voted in favor of the new stablecoin. The revenue generated by GHO will contribute to Aave’s DAO treasury, with governance entrusted to AAVE and stkAAVE token holders.
GHO is accessible to the public, allowing anyone to mint the stablecoin by using their supplied assets as collateral on the Aave Protocol V3 Ethereum market. This ensures that GHO remains overcollateralized by multiple assets.
The introduction of GHO adds to the growing number of DeFi-native algorithmic stablecoins. MakerDAO’s Ethereum-based stablecoin DAI currently holds the largest market capitalization among algorithmic stablecoins, valued at $4.28 billion according to DefiLlama data. However, the stablecoin market is still dominated by centralized issuers like Tether (USDT) and Circle’s USD Coin (USDC), which together account for 87% of the total circulating supply of U.S. dollar-pegged stablecoins.
At the time of publication, GHO is trading slightly below its intended $1 peg, with a price of $0.9927. It reached a low of $0.9814 on July 16, according to CoinMarketCap.
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