DeFi protocol AAVE’s proposal for the creation of the algorithmic stablecoin GHO receives the green flag from the AAVE DAO. The organization behind AAVE, Aave Companies, put up the request for its decentralized stablecoin on July 7.
The snapshot for the proposal’s voting began on July 28, 2022, and ended on July 31, 2022. Out of the total 1,793 votes, the approval was passed with flying colors, with over 99.99% voting in favor of the proposal.
Now that the proposal has been approved, the DAO will take the responsibility of administering the creation of the stablecoin. DAO members with over 501k AAVE voted in favor of the proposal.
What is the idea behind AAVE?
According to AAVE, the community of users might choose from a variety of cryptocurrency assets to back the stablecoin. Users of AAVE can create stablecoins using the assets they have pledged as collateral. While being held as collateral, the assets will also provide yields.
GHO will be a decentralized stablecoin that will be available on the Ethereum mainnet. To borrow GHO, users must submit collateral at a specific ratio to mint it. When a user repays a borrowed position, the protocol will burn the user’s GHO.
Now that the proposal has been approved, GHO borrowers will be able to earn continuous interest on the collateral provided. To summarize, GHO will be decentralized and over-collateralized by various assets. It will be backed by several forms of collateral accessible via the Aave protocol.
The team anticipates increasing GHO acceptance both within and outside of the crypto community. According to the team, GHO will have cheap transaction costs on L2s.
Ever since the fall of TerraUST, crypto enthusiasts have been quite skeptical of stablecoins. AAVE joins other groups of platforms that are cooking up plans to deploy a DeFi stablecoin.