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The vote on Aaves DAO’s proposal to launch a new decentralized stablecoin called GHO showed the community’s reaction and clarified Aaves DAO’s intentions for GHO’s future.
New stablecoin made by Aave in condition
The proposal to launch the GHO stablecoin was presented to the AAVE community in early July 2022, after which they received mostly positive reviews.
Aave is a decentralized protocol that allows users to Easily lend and borrow cryptocurrencies and generate attractive returns for lenders. It is a peer-to-peer service that sets loans and loan rates and matches lenders and borrowers using an algorithm.
Recall that GHO is backed by a variety of cryptocurrencies, chosen at the discretion of users, “while borrowers continue to earn interest on their underlying collateral”.
“Opportunity” as per offer other protocols that can form a GHO so “reliably” provided the relationship Respected Credit-to-Value Guarantee. When a user repays a loan or his position is liquidated, the intermediaries burn the minted GHO tokens. The number of tokens that facilitators can mint is limited to “segments”. for which the AAVE management will vote.
All interest paid goes to the DAO treasury. If the GHO stablecoin is approved by Aave’s improvement proposal, GHO will be regulated according to Aave’s governance practices. The Aave Governance Token is an Ethereum-based token that allows holders to vote on proposals to develop the Aave protocol. as an algorithmic stablecoin where $ 1 stablecoin is minted in exchange for $ 1 cryptocurrency.
The community is coming confirm this offer by more than 99%. Therefore, it will soon determine the exact conditions, the “genetic parameters” of the GGO.
The community has given the green light to 🟢GHO 👻. The next step is to rate GHO’s Genesis parameters. Expect suggestions next week on the governance forum https://t.co/ba4oK50Wb8.
– Aave (@AaveAave) July 31, 2022
Response from the Aave community
In response to this proposal The DAO community has raised concerns respect afSetting the interest rates DAO Aave and meaning limit the supply of the GHO token. The community also stressed the importance Module responsible for maintaining the GHO bond against the US dollar and stressed the importance of choosing the right brokers. Here, Aave is learning from the collapse of UST and various algorithmic stablecoins in recent months.
If approved by the municipality The first activator will be the new Ethereum protocol. if it switches to a less energy-intensive consensus mechanism called proof-of-stake during the famous merger scheduled for September.
Aave is different from centralized lenders like Celsius, which recently filed for bankruptcy. In the case of centralized lending, lending and lending are not transparent and are usually dictated by a few centralized voices. Documents accompanying Celsius’s bankruptcy filing showed that the company borrowed money without sending collateral, which creditors could easily liquidate.
On decentralized platforms where there are no middlemen and no top-down hierarchy, the required security of 100% or more gives the lender an idea of the origin of the borrower. Lack of an intermediary for creditors significantly lower yields what a company like Celsius could offer.
Ironically, Celsius started doing this days before filing for bankruptcy. Pay back the Loans from Maker and Aave.
After this validation of the proposal by the community, The price of the Aave token has skyrocketed, which indicates the interest of the market for this news. In fact, the Aave Token went from around $ 80 to over $ 108 in the past 7 days. In the past 24 hours, it has dropped below the symbolic $ 100 threshold.
Aave confirms his position as a key player in decentralized finance. Since its inception, the protocol has evolved by adding new strings. The future will show whether Aave can keep her favorite spot highly competitive DeFi environment.
Read more about the stablecoins made by Aave in our article here.