An Aave community proposal to launch a native crypto-based stablecoin GHO was passed over the weekend with 99% votes in favor of the proposal, its governance page shows.
The proposal hoped to improve on the features of its lending platform, as previously reported. Some 501,000 aave (AAVE) tokens were used to cast votes in support, with just 12 tokens in opposition. Address 0x5B3bFfC0bcF8D4cAEC873fDcF719F60725767c98 exerted the largest weight on votes, putting up 183,000 AAVE in support of the proposal.
Aave is a decentralized finance (DeFi) platform, that locks over $6.8 billion worth of various cryptocurrencies on supported networks, data from DeFiLlama shows. DeFi refers to lending, borrowing and other financial activities carried out on a blockchain, without third-party support. Aave is a lending and borrowing platform that allows users to earn yields on their pledged tokens.
GHO would soon be offered to Aave users and allow them to mint the token against their supplied collaterals. The token can be minted by users against a diversified set of crypto-assets. GHO holders will continue to earn interest on the supplied collateral, just like other lending transactions on Aave.
The token would work similarly to existing algorithmic stablecoins, which mint exactly $1 worth of tokens when users provide $1 worth of cryptocurrency. In GHO’s case, a user must supply collateral (at a specific collateral ratio) to be able to mint GHO. If a user repays a borrow position (or is liquidated), the GHO protocol burns that user’s GHO, the proposal explained.
As per the proposal, the interest payments on the stablecoin will be sent to the protocol's decentralized autonomous organization (DAO), generating revenue for the community and allowing the DAO to bolster its treasury for funding future products or tools.
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