Aave DAO is pleased to announce a series of significant protocol upgrades designed to enhance the utility of GHO and improve peg stability. These upgrades include the addition of stkGHO and the implementation of the GHO Stability Module (GSM).
The first major update is the integration of a GHO Safety Module (StkGHO) into the Aave DAO's Safety Module. This new category is designed to mitigate risks using GHO’s stablecoin attributes, helping to absorb potential shortfall events within the Aave ecosystem.
The GHO Safety Module is a strategic move that bolsters the Aave Protocol's resilience by adding a stablecoin asset, which is inherently less volatile than AAVE. This diversifies the Safety Module's capacity to absorb shocks from various risk vectors in case of shortfall events.
This upgrade is also expected to add utility for GHO holders and create an attractive yield opportunity with the ultimate result of an improved GHO peg. The initial distribution for stkGHO will be 50 AAVE per day, implying over 15% APR at current AAVE prices and with 10M GHO staked.
The second significant upgrade is the implementation and launch of the GHO Stability Module (GSM). Advanced features of the GSM include swap functionality that is activated upon deployment, such that the GSM will be enabled and ready for use immediately on launch.
Incorporating community feedback and aligning with Aave DAO's strategic objectives, the selected launch parameters of StkGHO have been adopted following the successful outcome of AIP-385 and the related snapshot.
With the community's preference for the initial parameters of the GHO Stability Module (GSM) expressed, the final deployment has been be formally presented directly to the DAO through an AIP vote starting on Jan 25th.
The GHO Stability Module will represent an additional revenue stream for the AAVE DAO and be an important part of reducing peg volatility.
Marc Zeller, founder of the Aave Chan Initiative, said, "These upgrades are a testament to our commitment to constant improvement for the Aave protocol. We believe they will significantly enhance the utility of GHO, and contribute to a more stable, secure, and efficient Aave ecosystem."
These protocol upgrades represent Aave DAO's ongoing commitment to enhancing the user experience for GHO users and improving the stability and security of the Aave ecosystem.
Relevant Links:
stkGHO launch parameters snapshot vote
stkGHO launch parameters forum discussion
GHO Stability Module snapshot vote