The algorithmic GHO stablecoin is pegged against the United States dollar and is backed by several digital assets.
By Mayowa Adebajo
Edited by Julia Sakovich
Updated
2 mins read
Decentralized finance (DeFi) protocol Aave has launched its GHO stablecoin on the Ethereum mainnet. The launch, which appears to have been well received, saw the circulating supply of the stablecoin quickly increase by $1.5 million within 24 hours of the launch. As of publication, however, over $2.19 million worth of GHO has now been minted.
The launch came shortly after an interesting community governance vote, which saw nearly all 424 participating addresses vote in favor of the new stablecoin.
According to Aave’s announcement, the algorithmic GHO stablecoin is pegged against the United States dollar and is backed by several digital assets. Most notably, its reserves include Ethereum’s native currency Ether (ETH), and Aave’s native token AAVE.
It might be worth mentioning that centralized stablecoins such as Tether (USDT) continue to be subject to criticism. And most of the criticism usually borders around what appears to be a lack of transparency around its reserves.
However, Aave has moved to build on this key area of transparency with the GHO. To this end, the protocol highlighted that all assets backing the GHO stablecoin are fully verifiable and transparent even as on-chain data can confirm. Aave wrote in part:
“All data regarding GHO transactions is available and auditable directly from the blockchain or via numerous user interfaces.”
From all indications, it may appear that DeFi-native algorithmic stablecoins are gradually growing through the ranks.
For what it’s worth, MakerDAO’s DAI is arguably the first and foremost choice among algorithmic stablecoins at the moment. As of press time, the Ethereum-based stablecoin has a $4.28 billion market capitalization, per DefiLlama data.
Also, there are other prominent algorithmic stablecoins including Frax, Ampleforth, and the rest. But the more recent addition was when DeFi protocol Curve also launched its flagship algorithmic stablecoin crvUSD in May.
Despite this growing trend, however, it should be noted that the general stablecoin market remains dominated by centralized issuers. That is Tether (USDT) and Circle (USDC). The duo alone accounts for at least 87% of the total circulating supply of all US dollar-pegged stablecoins.
With Aave’s GHO, however, algorithmic stablecoins are also gradually coming up. At the time of publication, GHO is trading slightly below the desired $1 peg at $0.9898. Although it fell lower to $0.9814 earlier on July 16, according to CoinMarketCap data.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this. He's a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from crypto however, Mayowa's fancied distractions include soccer or discussing world politics.
