The Aave Decentralized Autonomous Organization (DAO) successfully launched the GHO stablecoin on the Ethereum mainnet. The GHO stablecoin, which is pegged to the US dollar, was initially proposed in July 2022 as a means for users to mint GHO by supplying crypto collateral to Aave v3, drawing similarities to the popular MakerDAO’s DAI.
Aave announced that GHO sets itself apart from other stablecoins by redirecting repaid interest to the Aave DAO treasury. This innovative approach supports the sustainability of the protocol and facilitates the ongoing development of new features. Furthermore, AAVE token stakers enjoy a discount for minting GHO. At present, a substantial amount of GHO, totaling 2.2 million, has already been minted on the Ethereum network. However, the stablecoin is currently trading just below its peg at $0.992, as per CoinGecko.
Governance-Approved Facilitators and Multi-Collateral Support
To mint GHO, Aave Governance appoints and oversees “Facilitators.” These approved facilitators have the authority to mint a predetermined amount of GHO agreed upon by the DAO. Additionally, GHO is a multi-collateral token, enabling users to mint it with any collateral available on the Aave v3 protocol. This flexibility provides users with a diverse range of options when participating in the GHO ecosystem.
GHO’s launch arrives amidst an already crowded stablecoin market. With a total market worth of approximately $128 billion, stablecoins represent around 10% of the total cryptocurrency market capitalization. The market is dominated by Tether (USDT), accounting for 65% of the market share and boasting a circulating supply of $83.7 billion USDT. Tether’s supply has steadily increased by 27% since the start of 2023, benefitting from its U.S. treasury collateral and consistent income.
However, regulatory pressure has caused Circle’s stablecoin, USDC, to experience a 38% decline in supply during the same period. USDC holds a 21% market share, with $27.3 billion in circulation. Meanwhile, DAI, with $4.3 billion, secures the position of the third-largest stablecoin in the market.
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