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New stablecoin: Aave price is rising sharply



 It has been almost a month since there was talk of an Aave stablecoin. In the meantime, the community, in the form of the Aave DAO, has opted for one. The course is extremely attractive.


There will be a new fully decentralized stablecoin! On Sunday, the Aave DAO decided in favor of the new coin called GHO with a majority of 99.99 percent. In the hotly contested currency competition, the company competes against big players such as Tether, Circle and Curve.


All the reporting about the stablecoin did the in-house Aave Coin quite well - it was able to increase by around 70 percent in the last month, so that the price was even above the 100 US dollar mark several times. The timing may prove particularly favorable for investors, as the price was around USD 600 at its all-time high in May 2021.


The company now stands at a market cap of $1.5 billion and has a total value locked (TVL) of $4.75 billion. This puts Aave in the list behind well-known competitors such as MakerDAO, Lido, Uniswap and Curve. The latter company even made people sit up and take notice a few weeks ago with the announcement of a stablecoin.


“The community has given the green light for the GHO coin. The next step is to vote on the Genesis parameters of the GHO.”


This is what Aave announces via the official Twitter account . There is an article in the Aave blog that explains more about the coin. “GHO is backed by a basket of cryptocurrencies, with lenders who deposit crypto continue to earn interest on the collateral,” the article reads. So if an investor decides to deposit crypto security in the basket, he earns interest on it.


Stablecoin has a high level of approval

The community voted for a GHO coin with an incredible 99.99 percent of all votes. The fact that this ultimately benefits the DAO is a nice “side effect”.


“The community has been immensely helpful with their feedback.”


Aave lists a whole range of information that came from the community. This led the team to realize that they needed to address interest rates, caps, and a value-preserving mechanism for the stablecoin.


AAVE: Introduces new stablecoin

The interest earned from borrowing with the GHO is paid out in full to the DAO and controlled by Aave Governance.


For example, if a user redeems or liquidates their borrowed GHO, then the stablecoins are all burned (deleted) again. All interest then goes directly to the DAO.


USDT, USDC, DAI and Curve - A competitive market

Aave joins a $153 billion ecosystem with the stablecoin. Tether (USDT) narrowly leads the market with a market cap of $68 billion ahead of Circle's USDC. USDC, in turn, brings it to 55 billion US dollars. Tether in particular is repeatedly criticized for the low cash reserves of 5 percent.


Competitors DAI and BUSD together only bring it to around 20 billion US dollars, with DAI (from MakerDAO) being considered a direct competitor to Aave.


Similar to the planned GHO, the DAI stablecoin works in the same way in terms of decentralization: over-collateralization with a basket of cryptocurrencies is intended to secure the value in the event of a crash, so that there is enough liquidity for compensatory purchases on the market even if the value of the cryptocurrencies stored is reduced accordingly. However, in addition to Aave, Curve recently announced that they would launch a decentralized coin.


It remains to be seen whether Aave will prevail as the 5th largest DeFi protocol against giants MakerDAO and Curve.


Disclaimer

All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action taken by the reader based on the information found on our website is entirely at their own risk.

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