GHO
Web3 / cryptocurrency types
GHO is Aave's native decentralized stablecoin, which launched in 2023 as part of the protocol's expansion into stablecoin issuance. GHO is minted by Aave borrowers against their supplied collateral through the Aave lending protocol, creating a direct link between stablecoin supply and the health of Aave's lending ecosystem. Unlike USDC or USDT, which are custodial stablecoins backed by traditional assets held by external entities, GHO is fully collateralized by crypto assets locked in Aave smart contracts. The protocol employs a controlled supply mechanism where GHO is minted when users borrow and burned when loans are repaid, maintaining stability through economic incentives and collateral requirements. Example: A borrower deposits DAI and USDC into Aave, receiving credit, then mints GHO stablecoins against that collateral. The borrower pays interest on the GHO debt, which flows to Aave's reserve, aligning GHO supply with protocol health. Why it matters for cryptocurrency: GHO enables Aave to capture stablecoin demand directly, reducing reliance on external stablecoins and strengthening protocol economics. This model demonstrates how major lending protocols can achieve financial sovereignty through native stablecoin issuance.
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