GHO

GHO is a decentralized dollar-pegged stablecoin issued by the Aave protocol. It was approved by Aave governance and launched in 2023, extending Aave from a lending market into a stablecoin issuer.

GHO is minted by users who supply collateral to Aave. A borrower deposits assets into the protocol and can then generate GHO against that collateral, in the same way they would borrow any other asset from the market, except that GHO does not need to be supplied by a lender first because it is created by the protocol. Repaying the debt burns the GHO, removing it from supply.

Peg and governance

The peg is maintained through the borrowing rate and through arbitrage. Aave governance sets the interest rate charged on GHO borrowing, which directly influences how much is minted: a higher rate discourages minting and helps push the price back up if it trades below one dollar, while a lower rate does the opposite. Facilitators, entities approved by governance, are granted a capacity to mint GHO under defined rules, which allows the protocol to scale issuance through multiple channels while capping total exposure.

Because all interest paid on GHO borrowing accrues to the Aave DAO rather than to individual lenders, GHO is a direct revenue source for the protocol, which was one of the main arguments for creating it.

Supply and availability

GHO has no maximum supply. Outstanding supply currently sits at around 699 million and changes as positions are opened and closed. The token is available on Ethereum and has expanded to Avalanche, Arbitrum, Base, Gnosis Chain, and other networks. As with any collateralized stablecoin, the peg depends on collateral quality and on liquidation mechanisms working during volatile markets.