Today, we are excited to share that the Aave DAO has approved and executed the proposal to activate GHO – the Aave Protocol’s native, decentralized, over-collateralized asset. With GHO’s deployment now live on the Ethereum Mainnet, users can mint GHO on the Aave Protocol’s Ethereum V3 market against assets they have already supplied as collateral.
The Spirit of GHO
Over the years, the Aave Protocol has proven to be a reliable decentralized liquidity protocol. Countless developers rely upon the Aave Protocol to build their innovative products. DeFi enthusiasts utilize the protocol, recognizing the benefits of this transparent, accessible and democratic financial infrastructure that serves as a public good.
GHO was developed with the same goal as the Aave Protocol: to enable a people-powered financial ecosystem, accessible to all, that everyone can benefit from. With the Aave Protocol and GHO, people around the world have equal access to the same financial tools that are based on transparent and decentralized technology.
GHO is fully governed by the Aave DAO, who together set the rules and policies that govern GHO. To propose a change, community members must submit a proposal to the DAO, which is discussed openly among the community over a period of time, and followed by a vote. The vote determines whether the proposal will be supported and implemented by the DAO.
With GHO, the underlying mechanics and policies are fixed and cannot be changed arbitrarily by a centralized entity or an individual. All transactions are conducted via self-executing smart contracts, and all information regarding GHO transactions is published and auditable directly from blockchain or from many user interfaces.
More than two years ago, the Aave community recognized the need for an Aave-native decentralized and overcollateralized stablecoin that would empower users and serve as a payment layer. Stablecoins have the potential to become the payment layer for Web3 because of their speed without the price volatility that has deterred consumers and merchants from using digital currencies.
The GHO Stack
The Aave DAO is responsible for governing GHO, including the permitted supply of GHO, setting and adjusting the interest rate and minting caps, determining the risk parameters and approving and governing Facilitators who can mint GHO with predetermined conditions set by the DAO.
The architecture of GHO introduces unique roles, including Facilitators approved and governed by Aave Governance to mint GHO. Governance-approved facilitators will be able to mint up to a specified amount of GHO agreed upon by the DAO.
The first GHO facilitator is the Aave V3 market on Ethereum, allowing users to mint GHO against collateral held in Aave V3, which has extensive risk mitigation features, including e-mode, isolation mode and supply caps. At launch, the mint capacity of this facilitator is $100M, and can be updated by the Aave DAO (pending governance approval). Subsequently, the Aave DAO also approved a second facilitator – the Flashminting Facilitator. This facilitator makes it possible to mint GHO up to a preset cap without encumbering their collateral, provided that the borrow and repayment of GHO occurs within the same block on Ethereum Mainnet.
The Aave DAO can approve additional facilitators, an individual or institution can apply to become a facilitator. To apply to the Aave DAO to become a facilitator, please visit https://governance.aave.com/t/arfc-gho-facilitator-onboarding-process-and-application/12929
GHO is native to the Aave Protocol. Anyone can mint GHO using the assets they supply into the Aave Protocol V3 Ethereum market as collateral, ensuring that GHO is overcollateralized by a multitude of assets. A unique feature of GHO is that the collateral deposited into the Aave V3 protocol is productive and continues to earn yield, reducing the user’s cost of borrowing GHO.
GHO can be minted against all the assets that are available as collateral on the Aave V3 market on Ethereum. This will ensure that GHO is multi-collateral, allowing users to mint GHO with any composition of assets they supply to the protocol.
As GHO is an Aave Protocol native stablecoin, GHO will direct the interest paid on borrows of GHO towards the Aave DAO Treasury. Users who stake AAVE in the Aave Safety Module, to provide the protocol with a backstop, are able to mint GHO at a discounted rate.
Prior to deployment of GHO on V3 Ethereum Mainnet, GHO was audited by Open Zeppelin, SigmaPrime, ABDK, and Certora. Audit reports are available here: https://github.com/aave/gho-core/tree/main/audits
GHO & Build
GHO has been meticulously designed prioritizing the developer experience. With the Mainnet deployment, developers have the opportunity to seamlessly integrate into pre-existing applications and architect novel solutions that cater to the needs of actual users.
To start building with GHO head towards the docs: docs.gho.xyz and learn more about GHO SDK here: https://docs.gho.xyz/developer-docs/overview#gho-sdk
As blockchain technology continues to evolve, decentralized stablecoins offer many benefits such as price stability, transparency and censorship resistance. They have the potential to streamline cross-border payments, reduce reliance on traditional banking systems and democratize access. As these benefits become more widely known, we are likely to see greater adoption.
Within this context, the Aave community has voted to launch GHO, which can now be minted (with parameters defined by the Aave DAO) against assets available on Aave Protocol V3.
As an overcollateralized decentralized Aave-native asset, GHO has the potential to become a leading stablecoin and in the future, an important payment layer for the internet.
We thank the Aave DAO for the opportunity to build GHO based on their risk-mitigation specifications, and we thank the multiple third-party auditors, the community and other collaborators who made GHO possible.
GHO is an outcome of a dedicated ethos towards a decentralized future and culture where security is a paramount. GHO would not be possible without the dedicated community of security, risk and developer contributors within the Aave community who shared their expertise to review GHO.
GHO Codebase: https://github.com/aave/gho-core
Ensuring the security of smart contracts is of utmost importance.
To that end, the codebase of GHO – a decentralized, overcollateralized asset intended to maintain stable value – is subject to the GHO Bug Bounty Program (the “Program”). The Program provides an opportunity for community members to report “bugs” or vulnerabilities for a chance to earn rewards. The aim of the Program is to motivate the security community to take an active role in enhancing the security of open-source software. For more information, please go to https://github.com/aave/gho-bug-bounty