Aave Launches Ethereum Mainnet Decentralized Stablecoin GHO

Aave, a decentralized finance (DeFi) protocol, has launched its dollar-pegged stablecoin GHO on the Ethereum mainnet, with $2.19 million worth of GHO already mined.

In a blog post published on July 16, Aave announced the launch of a new stablecoin and described it as a “decentralized, over-collateralized” asset. The stablecoin is supported by a “multitude” of digital assets, including Ether and AAVE.

Following a community governance vote in which nearly all of the 424 participating addresses supported the new stablecoin, GHO was launched on the mainnet.

Total circulating supply of GHO since inception. Source: DeFiLlama

According to Aave, unlike centralized stablecoins such as Tether’s USDT, which have been criticized for an apparent lack of transparency regarding their reserves, the assets backing GHO are transparent, verifiable, and validated by on-chain data.

Aave wrote: “All transactions are executed through self-executing smart contracts, and all data from GHO transactions is accessible and auditable directly from the blockchain or through a variety of user interfaces.”

Additionally, Aave stated that GHO’s revenue would further bolster its DAO’s treasury, with AAVE and stkAAVE token holders being entrusted with governance.

Currently, the GHO stablecoin is available to the public.:

“Anyone can mint GHO using the assets they supply into the Aave Protocol V3 Ethereum market as collateral, ensuring that GHO is overcollateralized by a multitude of assets.”

With its launch, GHO represents a new addition to the expanding number of DeFi-native algorithmic stablecoins.

On May 4, the DeFi protocol Curve released its premier algorithmic stablecoin, crvUSD. According to data from DefiLlama, MakerDAO’s Ethereum-based stablecoin DAI is the largest algorithmic stablecoin in circulation, with a $4.28 billion market capitalization at the time of publication.

Stablecoin dominance by market capitalization. Source: DeFiLlama

However, centralized stablecoin issuers such as Tether and Circle continue to dominate the market.

Currently, Tether’s USDT and Circle’s USD Coin account for 87% of the total supply of all U.S. dollar-pegged stablecoins in circulation.

According to data from CoinMarketCap, at the time of publication, GHO was trading marginally below the desired $1 peg at $0.9927 and had fallen as low as $0.9814 on July 16.