DEFI

Aave introduces overcollateralized stablecoin GHO! Depositors can enjoy up to a 30% interest rate discount.

2023/7/17

Leading decentralized lending protocol Aave, since introducing the decentralized stablecoin GHO proposal in July last year, has undergone a series of tests and GHO has finally launched on Ethereum. The current interest rate is 1.51%. Depositors can receive up to a 30% interest rate discount.

The Aave DAO has successfully launched @GHOAave on the Ethereum Mainnet. Congrats to the Aave community on this historic moment! pic.twitter.com/Br3QGqMU8X
— Aave (@AaveAave) July 15, 2023

Table of Contents

Aave Emerges as Leading Lending Protocol

According to data from DefiLama, Aave currently has a total locked value of $6 billion, making it the leading lending protocol. Its operation is similar to most DeFi lending platforms - lenders deposit funds into liquidity pools in exchange for returns, interest, transaction fees, and governance tokens. Borrowers collateralize their loans with cryptocurrencies and borrow funds in stablecoins, without losing ownership of the original crypto assets. However, if the value of the collateral drops too much and borrowers fail to meet the requirement for additional collateral, the assets will be liquidated to repay the loan.

The stablecoin issued by Aave, GHO, is over-collateralized and transparent, anchored to the US dollar at a 1:1 ratio within its protocol. Borrowers can mint GHO using assets provided as collateral in Aave Protocol V3. The interest paid on GHO repayment is redirected to the Aave DAO treasury to support the protocol's sustainability and new feature development.

The borrowing interest rate for GHO is determined by AaveDAO and adjusted based on market conditions, currently at 1.51%. Holders of stkAAVE tokens can receive a 30% discount by staking AAVE, with a limit of 10,000 GHO. The current amount borrowed through the protocol is 2.21 million GHO, with a tentative protocol cap of $100 million.