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Thursday, October 6, 2022

Aave Will Be Launching Overcollateralized Stablecoin

Aave, one of the giants in decentralized finance, has unveiled several plans for launching an overcollateralized stablecoin referred to as the GHO.

This stablecoin will definitely be subjected to the community decentralized autonomous organization’s approval. This announcement was primarily made by the company- with the centralized entity supporting the protocol of the company- on its Twitter page last Thursday.

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The company stated that they had created an ARC that would be useful for a new decentralized, collateral-backed stablecoin, which is native to the ecosystem for the company- also called the GHO. According to the governance proposal that was shared last Thursday, this GHO would definitely be based on Ethereum, with the decentralized stablecoin being pegged to the US Dollar, which could itself be collateralized with multiple assets involving the choice of the user.

Aave Plans For Launching Stablecoin 

In order to obtain this GHO, the users of Aave will heavily need to mind the stablecoin against the collateral that has been deposited. However, the very list of supported collateralized assets, as well as the collateral ratio, hasn’t been detailed yet.

Since most of the users would essentially be borrowing the stablecoin against their holdings, the position would also have to be overcollateralized as per any normal loan taken under this DeFi giant. The proposal mentions that with continued community support, the GHO will be launched on the DeFi protocol, which would allow the users to mind GHO against their supplied collaterals.

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It has also been announced that the GHO would further be backed by a diversified set of assets from crypto that was chosen at the discretion of the user- all the while borrowers continue earning interest on the collateral that was been underlined by Aave.

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