Aave Touts New Decentralized Stablecoin GHO

Decentralized finance (DeFi) platform Aave (CRYPTO: AAVE) is launching a new stablecoin called GHO.

What Happened: Aave announced its plans on June 7. The company, which allows you to lend and borrow crypto, released an over-collateralized stablecoin named GHO to be collateralized by assets on the platform to protect against price instability.

Aave founder Stani Kuchelov announced in a tweet that the Aave team will be open to comments on the stablecoin’s launch, and that Aave’s Decentralized Autonomous Organization (DAO) would be voting on this proposal.

The Aave team decided to make GHO a collateralized stablecoin, as opposed to being algorithmic.

Following the large-scale crash of Terra’s (CRYPTO: LUNA) algorithmic stablecoin UST (CRYPTO: UST), there is global uncertainty surrounding stablecoins and the reliability of their dollar peg.

Aave touts numerous safeguards to protect GHO from a collapse. The collateral posted for GHO will be varied across numerous cryptocurrencies. Aave has also incorporated features to prevent risk, which will restrict the amount of the stablecoin that can be minted to avoid a de-peg.

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Following the recent launch of numerous stablecoins, Aave’s latest endeavour comes on the heels of a crashing crypto market.