Aave to launch overcollateralized stablecoin called GHO

cointelegraph.com:

Decentralized finance (DeFi) giant Aave has unveiled plans to launch an overcollateralized stablecoin called GHO, subject to the community DAO’s approval.

The announcement was made by Aave Companies — the centralized entity supporting the Aave protocol on its Twitter page on July 7, stating: 

According to the governance proposal shared on Thursday, GHO would be an Ethereum-based and decentralized stablecoin pegged to the U.S. dollar (USD) that could be collateralized with multiple assets of the user’s choice.

To obtain GHO, users would need to mint the stablecoin against their deposited collateral however, the list of supported collateralized assets and the collateral ratio has yet to be detailed.

As users are essentially borrowing the stablecoin against their holdings, the position will need to be overcollateralized as per any normal Aave loan.

“With community support, GHO can be launched on the Aave Protocol, allowing users to mint GHO against their supplied collaterals. GHO would be backed by a diversified set of crypto-assets chosen at the users’ discretion, while borrowers continue earning interest on their underlying collateral.”

The proposal notes that 100% of the interest payments accrued by GHO minters would be “directly transferred to the AaveDAO treasury; rather than the standard reserve factor collected when users borrow other assets.”

Holders of the staked AAVE token (stkAAVE) would also benefit from the stablecoin’s adoption, as Aave Companies has proposed that they would also be able to mint and borrow GHO at a discounted rate.

“If the community votes positively for the deployment of the protocol creating the ability for users to mint GHO, a recommended starting interest rate and discount rate will be