The AAVE community has voted in favor to create a new stablecoin— GHO, pegged to the dollar. On-chain data analytics site IntoTheBlock reports that user activity on the Aave protocol has reached a new yearly high.
GHO Stablecoin amid FUD?
Since the initial DeFi buzz last year and the subsequent woes that befell the financial system, there has been massive FUD and unending questions about the sustainability of the decentralized finance system.
Aave, which is one of the largest lending platforms on DeFi, is however recording increasingly positive activity on its platform. Data from IntoTheBlock’s report shows that over 1,860 addresses made transactions in just a few days around the voting process of the introduction of GHO stablecoin on Aave DAO.
The AAVE token reached a new high for the year as well going 114% up from bottom. The token is however still yet to do 2021 numbers and has been experiencing volatility since the vote to create the new stablecoin passed.
The token went up from the $77 level last Tuesday to over $108 over the weekend before dropping back to about $91, a six percent decline in the last 24 hours as at writing time according to CoinmarketCap.
Aave’s yield earning GHO Stablecoin
The newly approved stablecoin GHO will function like regular algorithmic stablecoins, which means it will mint exactly $1 worth of the GHO token when users provide $1 worth of cryptocurrency collateral.
Users will continue earning interest on their supplied collateral. The interest payments on the stablecoin will be sent to the DAO, generating revenue for the community and effectively allowing it to fund its treasury.
Aave’s Decentralized autonomous organization (DAO) proposal was backed by 99.9% of voters, who pledged over $500 million woth of AAVE in approving the measure to create GHO. The stablecoin will be launched soon since it got almost 100% approval.