DeFi Giant Aave Wants to Launch Its Own Stablecoin

DeFi protocol Aave We are planning our own launch StablecoinThe founder of the project announced today.

“We created ARC [Aave request for comments] The announcement posted on Twitter by Aave founder Stani Kulechov is a new decentralized, secured stablecoin known as GHO, unique to the Aave ecosystem.

This means that Aave’s proposal for a new stablecoin is in the hands of DAO.— A community of AAVE token holders who vote for decisions that will impact the future of the protocol. If the vote is successful, it means one of the biggest players in DeFi Introducing yet another Stablecoin option to the market. Widespread adoption of GHOs could be beneficial to DAOs.

The lending protocol Aave currently locks a total of $ 6.6 billion. according to For DeFi llama numbers. “Locked total value” refers to the amount of cipher currently used by the protocol.

People can use Aave — this is Ethereum— Lending or borrowing digital assets without going to a centralized intermediary. Its native token, AAVE, is also the 47th largest cryptocurrency, with a market capitalization of nearly $ 1 billion. AAVE was trading at $ 71.22 today. Around CoinMarketCap data.

Stablecoin if everything goes according to plan and AAVE holders vote for GHO approval According to the proposal, it is “supported by a diverse set of crypto assets.”

“If approved, the introduction of GHO will make Stablecoin borrowing more competitive with the Aave protocol, give Stablecoin users more options and send 100% of GHO borrowing interest payments to DAO. This will bring additional revenue to Aave DAO. ” ..

Stablecoin is an important part of the crypto ecosystem: tokens designed to be more stable than cryptocurrencies like Bitcoin and Ethereum. This is because stablecoin is usually fixed to fiat currencies such as the US dollar to prevent fluctuations and help traders maintain liquidity.

DeFi projects like Aave Blockchain Automate borrowing and lending — in a sense, we aim to be a “bankless” bank.

However, such projects are very experimental.not to mention Easy to be hacked And in some cases, a complete and complete catastrophe.

Just in May, Terra, one of the largest blockchains of its time and home to the popular DeFi lending protocol Anchor, Crashed completely.. After running the anchor and its algorithm, UST Stablecoin, Stablecoin unpegged. That is, it no longer holds the same value as the dollar. Also, the governance token LUNA, Has become virtually worthless.. The value of tens of billions of dollars has disappeared into the spooky air.

How is Aave’s stablecoin different? First, unlike Terra’s Stablecoin, GHO is not an algorithm’s stablecoin, and its functionality is not similar to algorithm’s stablecoin, said Aave Companies, the company behind the Aave protocol. Decryption..

Most stablecoins are centralized, backed by dollars, bonds, or other assets in the bank, or decentralized and backed by other crypto assets. This is what keeps stablecoin stable at a stable value of $ 1 per token. The growing part of the DeFi space, Algorithm stablecoin The difference is that it is unsecured and instead fixed to a stable asset using clever code.

Aave’s proposed GHO stablecoin falls into the category of decentralized and secured tokens, in the same class as DAI, the MakerDAO stablecoin secured by MKR tokens and other crypto assets.

Aave Companies added that it introduced “significant risk mitigation features” to prevent over-creation of GHOs and protect users.

This is also the same. By 2022, if anything, DeFi users can actually mitigate the risk.