The collapse of the Terra USD (UST) stablecoin and the temporary loss of the “peg” to the US dollar of some other stablecoins, such as USDD, does not appear to have impacted the plans of some crypto projects to launch their own digital stablecoins.
Decentralized finance (DeFi) protocol Aave, for example, announced that it plans to launch its stablecoin GHO. The digital asset will have 1:1 parity with the US dollar.
Aave Companies, the entity behind the Aave protocol, presented the proposal to launch the GHO at the project’s governance forum.
The suggestion is currently under discussion by DAO members. But the idea needs their approval to then reach the market.
Aave wants to launch GHO stable digital currency
Under the proposal, the stablecoin would be supercollateralized. That is, the value of digital assets in reserve will be higher than the value of stablecoins in circulation. In practice, the project resembles DAI, the most popular decentralized stablecoin on the Ethereum network.
Also according to the proposal, the idea is that Aave users can mint the stablecoin using assets they have provided to Aave as collateral.
These assets would continue to generate income while serving as collateral. In addition, GHO would be supported by a diverse set of digital assets chosen at the users discretion.
“If approved, the introduction of the GHO would make stablecoin lending on the Aave Protocol more competitive, provide more options for stablecoin users, and generate additional revenue for the Aave DAO by sending 100% of interest payments on GHO loans to the DAO,” says the proposal.
The text further says that the DAO will determine loan interest rates for GHO. The idea is for it to be a stable rate, which can be adapted depending on market conditions.
Stani Kulechov, founder of Aave, commented on the proposal on his Twitter account:
“While the GHO would be secured through assets in the ETH market, the main vision behind the GHO is to pursue organic adoption via L2 (Layer 2) to address real payment opportunities in the real world.”
Shiba Inu also wants to launch stablecoin
Another crypto project that announced its plans to launch a stable digital currency was Shiba Inu. As Cryptheory reported, the team behind memecoin plans to launch a decentralized stable coin called SHI.
According to the announcement, SHI will help balance payments by avoiding price fluctuations. Additionally, the team announced the launch of a rewards token called TREAT.