Aave presents algorithmic stablecoin GHO: more conceptually progressive than DAI dollar and technically fascinating

Aave presents algorithmic stablecoin GHO: more conceptually progressive than DAI dollar and technically fascinating

aave, a decentralized financial platform, introduced the algorithmic stablecoin GHO. GHO goes beyond other algorithmic stable coins such as Dai and technically offers interesting functions. In contrast to conventional stable coins, which are covered by centrally kept deposits, GHO is stabilized by smart contracts. Users can use their deposits as collateral to create GHO dollars. The GHO token is covered by ether, WBTC, other stable coins and defi tokens.

So far there are only a good three million GHO tokens, which is only a small amount compared to other stable coins such as USDT or USDC. The GHO-token course is currently just below one dollar, which may be due to the low liquidity. However, the AAVE team is optimistic that there is a need for a decentralized, over -collateralized and configurable stable coin.

The difference between algorithmic and central stable coins is how they draw money. Centralized stablecoins like USDT freeze dollars in one account and emit them as tokens, while algorithmic stable coins such as GHO do not keep dollars, but use crypto tokens to turn into dollars. Thus, an algorithmic stable coin effectively creates new money.

aave is a decentralized liquidity platform on which users can deposit or lift token into a liquidity pool. This platform has already bundled $ 8.7 billion in capital. Recently, users have also lifted GHO dollars, with interest rates being paid on the deposits. The interest for the loan flow into the treasury of the Aave-Dao.

The creation of GHO works similarly to the recording of a loan to AAVE or the release of DAI dollar through the Maker dao. In modern economies, money is usually created by banks by granting loans. However, platforms such as AAVE make it possible for everyone to draw money without needing a middleman. At AAVE, an algorithm replaces confidence in banks.

Overall, the GHO dollars are easy to understand, but offer interesting options for users on the AAVE platform. The stablecoin is linked to interest -bearing financial product and enables users to take out loans. Although the market for stable coins may already have been covered, the Aave team believes that there is a need for a decentralized and transparent stable coin. With the introduction of GHO, AAVE could offer a unique solution for this need.