Aave has put forward a proposal that aims to launch the native stablecoin, $GHO, on the Ethereum mainnet. Needless to say, the proposal comes into force only if it secures the majority of the votes from Aave DAO. If it goes live, then it will be backed by two Facilitators, namely FlashMinter Facilitator and Aave V3 Ethereum Facilitator.
First things first, Facilitator is someone who could be a protocol or an entity that is tasked with burning and generating GHO tokens. However, it comes with a limitation that is referred to by the community as a bucket size. Facilitators cannot cross that limit unless there is a vote to do otherwise.
FlashMinter Facilitator and Aave V3 Ethereum Facilitator have already been approved. They are not just being brought under a single umbrella through this AIP. The approval was announced at the time of sharing plans to deliver GHO on Ethereum. Also, the current AIP brings together all the parameters that were otherwise slipping separately.
When the proposal is passed, the community will be able to mint the said token against their collateral. The DAO Treasure will have a hundred percent of the interest that is generated from the borrowing of GHO. The interest rate is subject to change following the approval from DAO in a decentralized manner.
The financial framework of GHO will be managed by Aave DAO in a decentralized manner.
Specifically talking about Aave V3 Ethereum Pool Facilitator, it will enable borrowers to have GHO against their collateral. The only condition is that the collateral has to be deposited in the Mainnet Pool. Parameters on the table for the said Facilitator include an interest of 1.5% and a discount rate of 30%. It limits the size of the Bucket to 100M GHO for Facilitators.
These are the parameters that would be rolled out when the DAO approves the AIP.
FlashMinter Facilitator, on the other hand, enables users to mint and repay in a single transaction. As the name suggests, it resembles a lot of Flash Loans except for providing the minting facility instead of the loan facility. This will have an overall effect of maintaining its peg while also enabling a more efficient arbitrage.
It has been approved by Temp Check with 679,000 votes in favor. This has confirmed that the initial Bucket Size will be 2,000,000 GHO with no fees for Facilitator in any form. The early stage will be backed by lower fees to incentivize the arbitrage.
Simply put, GHO comes with the following actions:
- Enrolling the Aave Ethereum Facilitator as the first party
- Configuring the native stablecoin as a discounted token for the borrowing rate
- GHO is getting listed as a borrowable asset
- Deployment of its ERC 20 token and the transfer of control to Aave DAO
- Deployment of FlashMinter as the second Facilitator
DAO will soon begin voting, and the results will be displayed by Aave on the official site.