The Aave DAO Will Now Vote on the Proposal.
The founder of the DeFi protocol, Aave, said today that the project intends to introduce its own stablecoin. The Aave DAO will now vote on the proposal. Aave’s creator, Stani Kulechov, announced the development on Twitter, writing, “We have created an ARC [Aave request for comments] for a new decentralized, collateral-backed stablecoin, native to the Aave ecosystem, known as GHO,”
This means that Aave’s DAO—the community of AAVE token holders who vote on decisions that influence the protocol’s future—is now in control of its proposal for a new stablecoin. If the vote is successful, one of the main DeFi participants will launch another stablecoin alternative, which might be profitable for its DAO if GHO obtains widespread acceptance.
According to data from DeFi Llama, the total value of the lending protocol Aave is presently frozen at $6.6 billion. The amount of crypto presently being employed in a protocol is referred to as the “total value locked.”
Without using a centralized middleman, users can lend or borrow digital assets using Aave, which is powered by Ethereum. With a market worth of about $1 billion, its native token, AAVE, is ranked as the 47th largest cryptocurrency overall. According to data from CoinMarketCap, AAVE was trading at $71.22 today.
According to the proposal, the stablecoin will be “backed by a diversified set of crypto-assets,” if all goes as planned and AAVE holders choose to adopt GHO.
“If approved, the introduction of GHO would make stablecoin borrowing on the Aave Protocol more competitive, provide more optionality for stablecoin users, and generate additional revenue for the Aave DAO by sending 100% of interest payments on GHO borrow to the DAO,”
A stablecoin, a token intended to be more stable than cryptocurrencies like Bitcoin or Ethereum, is a crucial component of the cryptocurrency ecosystem. This is due to the fact that stablecoins are frequently anchored to fiat currencies like the dollar in order to limit swings and support dealers in maintaining liquidity.
The majority of stablecoins are either decentralized and backed by other cryptocurrencies or centralized and backed by dollars, bonds, or other assets in a bank. Because of this, the stablecoin maintains its consistent value of $1 per token. Algorithmic stablecoins, a burgeoning sector of the DeFi market, vary from traditional stablecoins in that they are not collateralized and instead require sophisticated programming to maintain their peg to a stable asset.