The Aave DAO finance protocol, which specializes in buying and lending/borrowing crypto and which is, unlike Celcius Network decentralized, has just gotten the green light from its community to create its GHO stablecoin. Thanks to its new toy, Aave intends to position itself on a market estimated at 150 billion US dollars which will be one of the keys to mass adoption.
A decentralized consensus that everyone agrees on
If we were to demonstrate democracy, the blockchain and the vote of its supporters would be a perfect example (ndr : thanks DAOs). The DAO of Aave after a 3-day deliberation voted 99.99% in favor of the creation of the GHO stablecoin.
The adoption of a new AAVE Improvement Protocol (AIP) is underway! Of course, in good DAO, the votes were carried out using AAVE tokens, votes registered on the blockchain that cannot be falsified. Yes, with the blockchain, there would be no suspicions of votes when voting for the next president of a country…
GHO Stablecoin: collateralization is cool, over-collateralization is much better
Between the war, the fall of Bitcoin, the bankruptcy of platforms and exchanges (chief editor’s note : hello Celsius), the collapse of the virtual currency market and the death of Luna, the best algorithmic stablecoin on the market (editor’s note: lol), it’s a safe bet to say that sales of antidepressants have risen sharply in the new year…
Launching a stablecoin in such a climate requires courage and mechanisms to avoid a new drama.
Stani Kulechov, the founder of Aave, has therefore opted for an over-collateralized stablecoin that guarantees the number of GHO tokens created. This virtual currency will be indexed to the USD at a rate of 1:1 and will enjoy near zero slippage thanks to the E-mode. The idea is that it should mimic the dollar perfectly, no matter how much you buy and sell.
The GHO will work in a similar way to the DAI and will be issued (mint) by the DAO which will ensure its proper functioning.
Aave’s founder has big plans for the GHO, which he already sees as the reference stablecoin for Ethereum’s Layer-2. With The Merge approaching and sounding the launch of Ethereum 2.0, the more optimistic might even add “for Layer-2 and for Ethereum!”
Decentralized finance is good, legit decentralized finance is better
Aave users wanting to mine GHO will be able to do so by providing a quantity of tokens as collateral, provided that said token is accepted by the platform. As said before, since GHO is an over-collateralized asset, you will not be able to deposit $1,000 worth of cryptos to get $1,000 worth of GHO. The amount deposited will have to be far greater than the amount borrowed.
Of course, everyone depositing assets will enjoy a rate of return (yield) on them. You have to make a living!
The GHOs can then be loaned or borrowed and the profits will go into the protocol’s treasury, thus ensuring its sustainability.
Aave price appreciates the launch of the GHO stablecoin
Not surprisingly, this announcement had a positive impact on the price of Aave. It went from $93.60 to $109.60, an increase of about 17%. Unfortunately, in a bearish context and because of the “sell the news”, the asset then fell to $88.40 and is currently evolving towards $98.
By creating its GHO stablecoin, the AAVE DAO protocol is definitely entering the stablecoin craze and mainstream blockchain adoption. These often allowing to secure accumulated wealth in the face of crypto-currency volatility and avoid taxation resulting from a sale in fudiciary asset, it plays an essential role of our industry. As we have seen in this article, this stablecoin will be decentralized, over-collateralized and community-governed: noble values that perfectly reflect those of the users of the blockchain, Bitcoin and cryptos in general. In your opinion, will GHO be a serious competitor to the many stablecoins already on the market like Tether, USD COIN, Binance USD or DAI? Will it survive the law of the market? As you can see, there are still many unanswered questions, so stay coinnected.
Co-founder of Coinpri, Expert in blockchain and NFT, I vulgarize the new web3 and blockchain paradigm here.