While Aave’s new stablecoin model is hardly a revolutionary design, the launch of GHO could be huge for Aave. 💪 CMC dives deeper into avalancheavax's overcollateralized stablecoin 🔎
to unlock their collateral, which can then be removed from the pool. The GHO repaid is then burned by Aave. Unlike other assets that are borrowed from Aave, where interest earned is paid out to asset suppliers,With the current GHO design, GHO’s price is hard coded on Aave as $1. As such, this allows GHO to maintain its peg viaopportunities. When GHO trades above $1, users are incentivized to mint GHO as $1 of collateral yields 1 GHO, which is trading for more than $1.
Since GHO is minted and burned by Aave, it has no supply side, which means that interest rates cannot be determined by utilization as per the other assets on Aave. As such, GHO borrowing rates are set by the Aave DAO and can be adjusted via governance vote.also receive a discount on the interest rate on GHO loans.
With the recent launch of GHO on the Goerli Testnet, it won’t be long before we see GHO’s Mainnet launch and its impact on the Aave ecosystem. GHO could very well cement Aave’s position as the king of lending protocols in DeFi. This article contains links to third-party websites or other content for information purposes only . The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site.
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