​​Aave (AAVE) Aave is an open-source protocol to create non-c | Crypto Great | Bitcoin | DeFi

​​Aave (AAVE)

Aave is an open-source protocol to create non-custodial liquidity markets and earn interest on supplying and borrowing assets with a variable or stable APY.

Last month, we wrote about an ongoing proposal for GHO, a native stablecoin on the Aave protocol. The newly passed proposal will create a decentralized multi-collateral stablecoin that is fully backed and native to the Aave Protocol.

GHO will be supported by multiple assets, and soft-pegged to the USD. GHO will be over collateralized by assets that continue to earn yield in the Aave protocol.

Similar to the MakerDao and DAI stablecoin, users can generate GHO after depositing collateral, and then burn GHO when reclaiming collateral.

Interest rates for borrowing GHO will be determined by the AaveDAO, with 100% of interest payments going directly to the DAO treasury.

In the first implementation, the system will set a certain amount of GHO at a discount depending on the amount of staked Aave supplied. These parameters will be determined by the Aave DAO.

This is expected to increase the price of AAVE as investors will be staking as much AAVE as possible to receive this discount on minting a stablecoin asset. The more AAVE taken out of circulation, the higher the demand, resulting in positive price movements.