Ethereum's decentralized lending protocol Aave has confirmed its plans to launch a decentralized stablecoin to strengthen its ecosystem and become more competitive in the blockchain industry.
Aave founder Stani Kulechov tweeted about Aave's plans to bolster its ecosystem by creating a native decentralized stablecoin for the protocol, which will be pegged to the value of the US dollar.
Called GHO, the Aave stablecoin will be a decentralized currency, backed by protocol collateral in a similar way to DAI, issued by MakerDAO.
Like DAI, GHO will be controlled by smart contracts and will not require cash reserves to guarantee its value and stability in the market.
On Twitter, Kulechov explained that GHO will be based on the Ethereum blockchain and will be issued by Aave users providing collateral in the DeFi protocol. In this way, the value of the stablecoin is guaranteed and, at the same time, the security of investors.
Although Aave's founder noted that this is an innovative project that will strengthen the Aave ecosystem and boost its growth, the Aave DAO still needs to vote for the stablecoin to be approved.
What is Aave's GHO stablecoin?
GHO was introduced by Aave Companies as a proposal to create a multi-collateral decentralized stablecoin that will be governed by the Aave community.
The stablecoin is designed to drive Aave's growth, leadership, and innovation as one of the most innovative decentralized DeFi ecosystems.
If approved, GHO will improve Aave's competitiveness and provide more optionality to stablecoin users, the company said in its statement. proposal.
This stablecoin will also enable the DeFi protocol to provide a censorship-resistant means of transacting value globally on the blockchain.
In addition to this, Kulechov commented that GHO will allow users to earn yield on deposited assets while minting the stablecoin. It will also allow the Aave DAO to generate additional income by receiving an interest rate directly into its treasury. This would help the organization build a more sustainable path to fund new innovations across the Aave community, the protocol founder commented.
Aave is the second largest DeFi protocol by liquidity
Aave is the second largest DeFi ecosystem in the blockchain industry today.
To date, this decentralized protocol has a liquidity of 6.700 million, growing more than 60% in the last year according to data from the DeFi Llama platform.
This growth has been driven by Aave’s innovation in the crypto industry. In February of this year, Aave introduced its Lens Protocol initiative, to boost the creation of blockchain-based decentralized social networks.
Also, since last year, Aave has been developing new tools, such as Aave Pro and Aave Arc, to encourage institutions to enter the world of decentralized finance.
According to Kulechov, institutional investors are increasingly interested in the digital ecosystem. However, the complexity of this ecosystem has become one of the biggest barriers to entry.
Aave aims to overcome these limitations by providing a safe environment for organizations and institutions to participate and explore the potential of DeFi on the blockchain.
Continue reading: Lens Protocol, Aave's initiative to promote native social networks on the Web3
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