Ave Lab Suggested update The firm announced on Aug. 26 that it would fund the GHO Stable Module (GSM) and use shares from BlackRock’s tokenized fund BUIDL to maintain the stablecoin’s dollar peg.
According to the proposal, the new GSM would allow Aave to exchange USD Coin (USDC) given to users for BUIDL shares to mint GHO, the ecosystem's native dollar-backed stablecoin. The tokens would be held in a smart contract until users exchange their GHO for USDC.
BUIDL shares have a stable value of $1 per token and pay daily yields to investors every month. The fund allocates its assets between cash, U.S. Treasury securities and repurchase agreements, according to RWA.xyz. dataBUIDL has assets under management (AUM) of over $502 million.
Rising market capitalization of GHO
The proposal notes that the new GSM will expand revenue streams from Aave DAO into the real assets (RWA) sector and increase collaboration opportunities with BlackRock.
This is a much needed boost for GHO, the stablecoin Its market capitalization is around $120 million. Despite recording 146% growth since May 1, the token is still far behind more prominent peers such as PYUSD and First Digital USD, which boast market capitalizations of $1 billion and $2.8 billion.respectively.
Notably, Aave Labs is betting on BUIDL's liquidity and integration with USDC to help maintain the stablecoin's peg to the dollar, as shareholders of BlackRock's tokenized fund can exchange their holdings for USDC at any time with pre-approved holders.
This is the second GSM to be introduced in GHO, following the first in January. suggestion To facilitate the exchange of GHO into USDC and Tether USD (USDT), we have introduced the creation of two smart contracts.
Additionally, Circle, the issuer of USDC, has also provided a $100 million redemption fund to guarantee the conversion of BUIDL to USDC via GSMs of GHO/USDC. Currently, there is $74.7 million USDC available in the fund.
According to the proposal, swap fees will be accumulated in GHO and dividends will be paid monthly in BUIDL. Additionally, it is unclear whether GSM will integrate a USDC buffer to cover gas redemption costs in BUIDL for small swaps, but this will be further evaluated at a later date.
The proposal is still in the “temporary check” stage, which is typically used to see how members of Aave governance react to the proposal. If the reaction is mostly positive, AAVE token holders will be able to vote on the new GSM proposal.
At press time, only one user had expressed mostly positive feedback on the proposal.
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