Popular decentralised finance (DeFi) network is ready to introduce its own dollar-pegged stablecoin backed by the community.
In a recent release, the lending and borrowing platform Aave (AAVE) said that it would construct the new stablecoin GHO on the top smart contract platform Ethereum (ETH).
The decentralised autonomous organisation (DAO) of the crypto project will approve and then control the coin.
“GHO will offer a degree of security and decentralisation that is inclusive for crypto-native users while emphasising its use cases for a rising mainstream audience in its growth plan.
GHO will be over-collateralized by yield-generating assets, backed by different forms of collateral accessible on the Aave Protocol, and administered by the Aave community.
The borrowing procedure for the stablecoin will resemble Aave’s standard model, in which users supply adequate collateral for the minting of additional GHO. Eventually, redeemed or liquidated positions will result in the tokens being destroyed, while accrued interest will be sent to the AaveDAO’s treasury.
Aave claims it is experimenting with stablecoins because they provide the quick, easy, and safe transfer of fiat currency through blockchains.
There is currently around $150 billion worth of stablecoins in circulation, elevating them to a key role within the cryptocurrency ecosystem. Stablecoins provide instantaneous, low-cost, borderless, and secure cryptocurrency exchanges on the blockchain.
Transparency and censorship resistance are added to this list of advantages by decentralised stablecoins, which are an intrinsic feature of Web3.
Stablecoin use will continue to increase as crypto-assets become better integrated with a less crypto-native user base. Stablecoins that are decentralised offer censorship-resistant fiat cash on the blockchain.” Aave is up 12.55 percent on the day and trading at $71.96 at the time of writing.