Aave is a top lending market in the defi ecosystem, and last summer they announced that they would be launching their own stablecoin, GHO. This is expected to be a catalyst for Aave platform growth, and it pertains to an emerging narrative of protocol-native stablecoins in 2023 and moving forward. This report explores the mechanics of GHO based on available information and examines the implications for the Aave ecosystem.

Background 🏞️

Last summer, the AAVE DAO announced that they would be launching $GHO, a protocol native, decentralized, collateral-backed stablecoin pegged to the USD. Although it was in the midst of a bear market, this was big news for the defi ecosystem. Aave is a big name in the space, and has the potential to drive a new narrative through innovative products like GHO.

Since July, a technical whitepaper for GHO was released, code was successfully audited, and GHO has been deployed to an internal testnet.(wen public testnet?)

While it’s been confirmed that GHO will launch after Aave V3 is deployed on mainnet, it is unclear just how soon it will be. Mid-February through March seems to be a good estimate, but the best source is always the Aave governance forum and discord.

Before we jump into the mechanics, take a moment to contextualize what Aave is, and why it matters that they are launching a stablecoin.

What is Aave?