DeFi protocol Aave altcoin Aave Companies, the organization behind it, has submitted a proposal to Aave’s management forum to create a new stablecoin called GHO.
Currently, the proposal is open to discussion and must pass a management vote before it can be implemented.
Aave’s Stablecoin Will Be Similar To DAI
The stablecoin in question will be over-collateralized and will resemble DAI, the most popular decentralized stablecoin in the Ethereum ecosystem.
According to the proposal, Aave users will be able to print stablecoins by using the assets they supply to Aave as collateral. These assets will continue to generate returns while also being used as collateral.
Aave founder Stani Kulechov said on Twitter, “While the GHO will be secured by assets in the Ethereum market, the main vision of the GHO is in real life via L2s (layer 2s) to solve real-life payment opportunities on the internet and in the field. is to continue to be adopted,” he said.
Altcoin Establishment Will Earn Interest Income From New Stablecoin Borrowers
Kulechov stated that Aave DAO will also benefit, as anyone who borrows this stablecoin will have to pay interest. The manager also reported that the development process of the stablecoin in question has been completed and plans are made with the relevant companies for an audit on July 11th.
happened in May terra After its collapse, algorithmic stablecoins began to seek to hedge any depreciation through over-collateralization. One of the first examples of this TRON seen in USDD, which was launched as the ecosystem’s own stablecoin. It came to life exactly at a time when the TerraUSD collapse was going on. USDD, UST announced that it would apply the over-collateralization method after its collapse.
*Not investment advice.