Aave will launch the decentralized stablecoin GHO, introducing innovative governance and discount mechanisms.

Aave is considering launching a new type of decentralized stablecoin called GHO. This stablecoin will be pegged to the US dollar and supported by various encryption assets as collateral.

The main features of GHO include:

1. Complete Decentralization
2. Excessive collateralization by assets that continuously generate income
3. Various collateral supported by the Aave protocol provide guarantees
4. Governed by the Aave community

Users can mint GHO by providing collateral on the Aave protocol. Borrowers can still earn interest on their collateralized assets, while all decisions related to GHO will be handled by Aave governance.

The introduction of GHO is expected to enhance the competitiveness of stablecoin lending within the Aave protocol, providing users with more options. The interest generated from GHO lending will entirely belong to the DAO, bringing additional revenue to the Aave ecosystem.

The current market value of stablecoins has reached approximately 150 billion USD, making them an important component of the cryptocurrency space. Decentralized stablecoins can increase transparency and resistance to censorship, which aligns with the core principles of Web3. As crypto assets further integrate with traditional users, the application scope of stablecoins is expected to continue to expand.

GHO will run on the Ethereum mainnet, and users need to provide collateral to mint GHO. When users repay their loans or are liquidated, the corresponding GHO will be destroyed. All interest generated from GHO minting will be directly transferred to the Aave DAO treasury.

GHO introduces the concept of "facilitators", allowing specific protocols or entities to mint and burn GHO tokens after obtaining governance approval from Aave. Each facilitator has a "bucket", representing the limit of GHO they can generate.

The Aave protocol will act as the first facilitator to launch GHO on the AAVE market on Ethereum. The borrowing rate for GHO will be determined by the Aave DAO, maintaining relative stability but adjustable based on market conditions.

GHO will also introduce a discount mechanism that allows participants in the security module, ( stkAAVE holders, to receive a discount on GHO borrowing rates. The discount can range from 0% to 100%, with specific parameters controlled by Aave governance.

Some features of Aave V3, such as isolation mode and E-Mode, will help reduce the risk of GHO. In the future, GHO is expected to achieve cross-chain distribution through the Portal function.

The launch of GHO will bring additional revenue to Aave DAO, and these funds can be used for various aspects such as ecosystem innovation, contributor rewards, and more. Aave governance will be able to determine the native interest rate of GHO, achieving Decentralization of monetary policy control.

In addition to the encryption native community, GHO is also expected to see widespread application on Layer2 networks. In the future, there may be plans to encourage developers to integrate GHO payment methods through reward programs and hackathon events, expanding its use among mainstream users.

The Aave community will decide through a snapshot vote whether to continue advancing the GHO project. If approved, initial interest rate and discount rate proposals will be put forward, and a security audit will be conducted. Future cross-chain deployment of GHO will also require further governance approval.

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