Aave Summoning GHOsts With a New Native Stablecoin Proposal

cryptonews.com:

Popular decentralized finance (DeFi) protocol Aave (AAVE) has proposed to the decentralized autonomous organization (DAO) the introduction of a native, decentralized, fully collateral-backed, USD-pegged stablecoin on the Ethereum (ETH) mainnet – dubbed GHO.

“Calling all GHOsts,” said Aave on Thursday, announcing that they’ve created a new Aave Request for Comments (ARC) – which is the first step in the governance improvement process.

Per the governance proposal,

“With community support, GHO can be launched on the Aave Protocol, allowing users to mint GHO against their supplied collaterals.”

As for these collaterals, GHO would be backed by “a diversified set of crypto-assets chosen at the users’ discretion.” The borrowers would continue earning interest on their underlying collateral.

GHO would be created by users. These are borrowers, and each would need to supply collateral at a specific collateral ratio to be able to mint GHO. When a borrower repays a borrow position or gets liquidated, the GHO protocol would burn their GHO. The accumulated interest payments would be transferred to the AaveDAO treasury.

GHO would introduce the concept of Facilitators (e.g., a protocol, an entity, etc.), which has the ability to trustlessly generate and burn GHO tokens, and each would have to be approved by Aave Governance.

For each Facilitator, Governance would also approve “a bucket” for each Facilitator, which is the upward limit of GHO a specific Facilitator can generate.

Ultimately, Aave Governance would have all the decision-making power relating to GHO.

The proposal argued that,

“If approved, the introduction of GHO would make stablecoin borrowing on the Aave Protocol more competitive, provide more optionality for stablecoin users and