Aave has launched its algorithmic stablecoin, GHO, backed by multiple crypto assets, including Ethereum (ETH). GHO will be an alternative to DAI, which is a stablecoin mined by MakerDAO.
Aave’s GHO is live
After more than a year in development, Aave, the world’s second largest decentralized finance (DeFi) protocol, has launched GHO (pronounced “go”), a hyper-secured decentralized algorithmic stablecoin on Ethereum.
On July 15, Aave said that DeFi market participants can mint the GHO stablecoin by depositing collateral assets backed by the Aave V3 protocol on Ethereum.
Unlike popular stablecoins like Tether (USDT), which are issued by centralized entities, the GHO algorithmic stablecoin will be issued and managed by AaveDAO, a decentralized autonomous organization.
In correspondence with Bloomberg, Stani Kulechov, founder and CEO of Aave, said that revenue generated by GHO will be allocated to community contributors to the project, including security experts, developers, and others.
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The Aave team says that all GHO transactions will be processed through self-executing smart contracts, with transaction data, reserves, and other key information related to the stablecoin verifiable on-chain, confirming the transparency of the project.
Cryptocurrencies, DeFi and stablecoins
Despite the transparency that decentralized stablecoins provide, their centralized counterparts still dominate the market. The collapse of UST, an algorithmic stablecoin project Terra last year, proves that so-called decentralized stablecoins are not immune from the risks of manipulation and decoupling.
MarkerDAO’s DAI, which managed to recover from the March decoupling event, is the world’s largest algorithmic stablecoin, with a market cap of $4.27 billion.
At the time of writing, GHO is trading at $0.993870 with a total supply of 2,267,933 GHO, according to Queen Gekko.
It remains to be seen if Aave’s GHO stablecoin will gain traction and potentially outpace DAI or USDT.
