Aave Protocol, a decentralized finance (DeFi) platform, has successfully launched its new algorithmic stablecoin called GHO on the Ethereum mainnet, with $2.19 million worth of GHO minted thus far. GHO is described as a decentralized and over-collateralized asset, backed by a range of digital assets including Ethereum’s native currency Ether (ETH) and Aave’s native token AAVE.
The decision to launch GHO on the mainnet followed a community governance vote, where nearly 100% of the participating addresses voted in favor of the stablecoin. In contrast to centralized stablecoins like Tether’s USDT, which have faced criticism for their lack of transparency regarding reserves, GHO’s assets are transparent and verifiable through on-chain data.
All transactions involving GHO are executed through self-executing smart contracts, ensuring transparency and auditability directly from the blockchain or various user interfaces. The revenue generated from GHO will contribute to Aave’s decentralized autonomous organization (DAO) treasury, with governance entrusted to AAVE and stkAAVE token holders.
GHO is now publicly accessible, allowing anyone to mint it by supplying collateral into Aave Protocol’s V3 Ethereum market. This approach ensures that GHO remains overcollateralized by multiple assets.
The launch of GHO signifies the growing trend of DeFi-native algorithmic stablecoins. MakerDAO’s Ethereum-based stablecoin DAI currently holds the largest market capitalization among algorithmic stablecoins, at $4.28 billion according to DeFiLlama. However, centralized issuers such as Tether and Circle still dominate the stablecoin market by capitalization.
At the time of publication, GHO is trading slightly below its $1 peg, with a price of $0.9927 and reaching as low as $0.9814 on July 16, according to CoinMarketCap data.
Cointelegraph reached out to Aave for comment but has not received an immediate response.
Overall, Aave Protocol’s launch of the GHO stablecoin introduces another decentralized and transparent option in the growing ecosystem of algorithmic stablecoins within DeFi.