The Bankless Guide to Aave GHO

GHO is a decentralized, multi-collateral stablecoin native to the DeFi lending protocol Aave. Stablecoins are a unique type of cryptocurrency whose value is backed by an outside asset, typically a traditional currency like the U.S. dollar. According to this model, GHO has been designed to have a stable $1 USD price and to facilitate transactional activities in and around DeFi.

Unlike many stablecoins, the oracle price for GHO is fixed, meaning it cannot be changed. This makes GHO a transparent and reliable stablecoin. The interest rates for GHO are defined by the Aave DAO (Decentralized Autonomous Organization), and the repaid interest is redirected to the DAO instead of the asset suppliers. This structure is expected to generate additional revenue for the Aave DAO.

Borrowers who stake AAVE in the Safety Module can receive discounts on the borrowing rate for GHO. For each stkAave (staked AAVE), there will be a discount on the borrowing rate for 100 GHO. This discount model is interchangeable and can be redesigned and replaced if needed by The Aave DAO.