GHO is the next name to join the stablecoin war between DeFi protocols when Aave recently deployed this token on the Ethereum testnet.
Aave deploys stablecoin GHO to Ethereum’s testnet
Aave, one of the largest lending protocols in the DeFi market, has just launched the stablecoin GHO on Ethereum’s Goerli testnet.
It’s GHO time! @GHOAave is now on Ethereum’s Goerli Testnet!
👻 https://t.co/cM58b6qSBa pic.twitter.com/xueGERoqnw
— Aave (@AaveAave) February 9, 2023
Developers can now test the stablecoin, while also detecting bugs in the project’s source code, before GHO is deployed on the Ethereum mainnet.
This development has been expected by the Aave community since the governance vote was passed in August 2022.
Accordingly, GHO will have to enter the competition with many current names, including traditional stablecoins such as USDT, USDC, DAI or even expected names in the near future such as crvUSD, FRAX, etc.
> See more: Stablecoins – “Economic moat” of downtrend projects?
How does GHO work?
According to the document published by Emilio Frangella and Steven Valeri from Aave Companies, the price of the stablecoin will be fixed at $1 with oracle.
The supply of GHO will be controlled by a mint-burn mechanism and this stablecoin will only be created when users deposit collateral into Aave’s platform.
When the user repays the loan, Aave will proceed to remove the corresponding amount of GHO from circulation. At the same time, users who stake AAVE tokens into the protocol will receive a more favorable loan interest rate.
In addition, the Aave DAO will be responsible for voting and setting parameters such as interest rates and risk scales for GHO management.
>> See more: AAVE publishes details on stablecoin GHO
Before being deployed on the testnet, GHO has been vetted by companies such as Open Zeppelin, SigmaPrime, ABDK, and Certora. A $250,000 prize will also be given to white hat hackers who contribute and respond to potential vulnerabilities in the product.