Ethereum decentralized lending protocol Aave has confirmed its plans to launch decentralized stablecoin to bolster its ecosystem and become more competitive in the blockchain industry.
Aave founder Stani Kulechov reported on Twitter about Aave’s plans to bolster its ecosystem with the protocol, which will be pegged to the value of the US dollar.
Called GHO, the Aave stablecoin will be a decentralized currency, backed by protocol collateral similar to DAI, issued by MakerDAO.
BREAKING: The @AaveAave team submitted ARC to launch a self-sovereign overcollateralized stablecoin GHO backed by the Aave Protocol collaterals 👻 👇🏼 https://t.co/YHpLmipLjl
— stani.lens (🌿,👻) (@StaniKulechov) July 7, 2022
Like DAI, GHO will be controlled by smart contracts and will not need cash reserves to guarantee its value and stability in the market.
On Twitter , Kulechov explained that GHO will be based on the Ethereum blockchain and will be issued by Aave users providing collateral in the DeFi protocol. In this way, the value of the stablecoin is guaranteed and, at the same time, the safety of investors.
Although the Aave founder noted that it is an innovative project, which will strengthen the Aave ecosystem and boost its growth, the Aave DAO still needs to vote for the stablecoin to be approved.
