What is GHO stablecoin?

GHO is Aave's native USD-pegged stablecoin, launched in July 2023. It's over-collateralised, meaning users deposit crypto assets on Aave and can borrow GHO up to a collateral ratio. All parameters are controlled by Aave DAO governance, and interest from GHO borrowing flows 100% to the Aave DAO treasury.

How do I mint GHO on Aave?

To mint GHO: 1) Supply collateral in Aave V3 (like ETH, wstETH, WBTC, or USDC), 2) Enable the collateral toggle, 3) Go to Borrow section and select GHO, 4) Input the amount you want to borrow (stay below max), 5) Confirm the transaction. GHO will be minted to your wallet. Remember to maintain a healthy collateral ratio to avoid liquidation.

Why is GHO borrowing cheaper than DAI or USDC?

GHO rates are typically set lower than USDC/DAI on Aave to encourage adoption. Additionally, if you stake AAVE in the Safety Module (stkAAVE), you can borrow a portion of GHO at an even more discounted interest rate. This makes GHO an attractive option for users who need stablecoin liquidity.

What are the risks of using GHO?

Key risks include: collateral liquidation risk (if health factor drops below 1), peg risk due to smaller supply and thinner liquidity compared to USDC/USDT, liquidity risk when swapping large amounts, governance risk as Aave DAO controls rates and parameters, and smart contract risk. Always maintain healthy collateral buffers and understand the risks before borrowing.

What is sGHO and when will it launch?

sGHO (Savings GHO) is a planned feature coming in Aave V4 that will allow holders to deposit idle GHO into a vault to earn yield, similar to Maker's DAI Savings Rate. This will make holding GHO more attractive, not just borrowing it, and is expected to boost GHO adoption significantly.

GHO Stablecoin Explained (2025): How Aave's Native Dollar Works

Estimated reading time: ~11 minutes

TL;DR (for the skimmers)

What GHO is: Aave's native USD-pegged stablecoin, launched in 2023; over-collateralised, governed by the Aave DAO.

How it's minted: Deposit collateral into Aave, borrow GHO; supply must always exceed debt.

Why it matters: Borrowing GHO is usually cheaper than borrowing USDC/DAI; interest flows to Aave DAO (protocol revenue).

Discounts: If you stake AAVE in the Safety Module (stkAAVE), you can mint GHO at a discounted rate.

Where it fits: Key part of Aave V3 today, deeper integration coming in Aave V4 (cross-chain GHO, savings features like sGHO).

Compare quickly:

• GHO vs DAI: Both over-collateralised; GHO controlled by Aave DAO, DAI by MakerDAO.
• GHO vs USDC/USDT: GHO is fully on-chain & decentralised; USDC/USDT are centralised with issuer risk.
• GHO vs USDe (Ethena): GHO = conservative over-collateralisation; USDe = synthetic with delta-hedging (riskier).

Risks: peg deviations (still small supply), liquidation risk on your collateral, interest rate governance changes, liquidity depth vs bigger stables.

What Is GHO?

Launched

July 2023 by the Aave DAO.

Design

Over-collateralised, like DAI. Users deposit crypto on Aave and borrow GHO up to a collateral ratio.

Governance

All parameters (borrow rate, Facilitators, debt ceilings) controlled by Aave DAO governance.

Peg

Soft-pegged to USD, kept stable by arbitrage (borrow/repay incentives) and governance levers.

By mid-2025, GHO supply surpassed $300M, making it the 20th largest stablecoin. Still small compared to giants (USDT > $100B, USDC > $30B), but growing steadily thanks to cheap borrowing and Aave's footprint.

How GHO Works (Step-by-Step)

Step 1: Deposit Collateral

Deposit collateral into Aave (e.g. ETH, wstETH, WBTC, USDC).

Step 2: Borrow GHO

Borrow GHO – this mints new GHO into circulation. Your position has a health factor like any Aave loan.

Step 3: Interest Accrues

Interest accrues at a base rate set by governance.

Example: if GHO borrow APR = 2%, a 1,000 GHO debt grows to ~1,020 GHO over a year.

Step 4: Repay GHO

Repay GHO (and interest) → your debt clears, collateral is unlocked.

Interest Distribution

100% of GHO borrow interest flows to the Aave DAO treasury, unlike other assets where only ~10% goes as reserves.

Key Features of GHO

Competitive Borrow Rates

• GHO rates are usually set lower than USDC/DAI on Aave to encourage adoption.
• Governance can adjust rates depending on demand and peg health.

stkAAVE Discounts

Users staking AAVE in the Safety Module (stkAAVE) can borrow a portion of GHO at a discounted interest rate.

Example: Base GHO rate = 2.5% APR. With stkAAVE, part of your loan might accrue at ~1.5% APR.

Facilitators

• Only authorised modules/entities ("Facilitators") can mint GHO.
• Currently: the main Facilitator is Aave V3 Ethereum pool.
• Future: other Spokes/partners can be added in V4 with governance-set quotas.

sGHO (Coming Soon in V4)

• Planned "Savings GHO" will let holders deposit idle GHO into a vault to earn yield (similar to Maker's DAI Savings Rate).
• This will make holding GHO more attractive, not just borrowing it.

GHO vs Other Stablecoins

Stablecoin	Model	Collateral	Governance	Risks	Typical Borrow Cost
GHO	Over-collateralised (Aave)	Crypto assets on Aave	Aave DAO	Peg depth, smaller liquidity	~1.5–3%
DAI	Over-collateralised (Maker)	ETH + RWAs	MakerDAO	USDC reliance, governance	~2–5%
USDC	Centralised fiat-backed	Cash, T-bills	Circle	Blacklist, issuer risk	Not borrowed, but lent
USDT	Centralised fiat-backed	Mixed reserves	Tether Ltd	Opacity, issuer risk	Same as USDC
USDe	Synthetic (delta-hedged)	ETH collateral + short perps	Ethena DAO	Exchange risk, funding cost	~8–15%

Risks of Using GHO

Collateral liquidation risk

Borrowing GHO still requires over-collateralisation; if HF < 1, your collateral can be liquidated.

Peg risk

GHO's peg has held close to $1, but its smaller supply means thinner liquidity vs USDC/USDT. Temporary deviations may occur.

Liquidity risk

Some pools may lack deep GHO liquidity, so swapping large amounts could move price more than for bigger stables.

Governance risk

Aave DAO controls GHO's rate and Facilitators; parameter changes could impact costs and availability.

Smart contract risk

Same as Aave generally – audited and battle-tested, but never zero.

Strategies With GHO

Cheap stablecoin borrowing

Mint GHO for lower APR than other stables; swap to USDC/DAI if needed.

Yield farming

Borrow GHO → farm in Curve/Convex pools; if farm yield > borrow APR, you profit.

Loop with staking discounts

Stake AAVE → borrow discounted GHO → reinvest into Aave ecosystem or farms.

Long-term treasury play

DAOs mint GHO for working capital, keeping Aave ecosystem revenue aligned with usage.

Step-by-Step: Minting & Using GHO

Supply collateral in Aave V3 (Ethereum main market).
Enable collateral toggle.
Go to Borrow, select GHO, input amount (stay below max).
Confirm borrow → GHO mints to your wallet.
Use GHO (spend, LP, or swap).
Repay GHO later to clear debt and free collateral.

Tip: Track your borrow APR; if you hold stkAAVE, check discounted allocation.

Outlook: GHO in Aave V4

Deeper integration into the Hub-and-Spoke design

Cross-chain GHO minting

(collateral on one chain, mint GHO on another)

sGHO Savings Rate to boost adoption

Potential for broader Facilitators

(partners, RWAs) to expand supply

Aave DAO's aim: grow GHO into a major decentralised stablecoin while funnelling sustainable revenue back to the protocol.

Conclusion

GHO is Aave's bet on stablecoin dominance. It offers users cheaper borrowing, aligns protocol incentives (all interest goes to Aave DAO), and provides a decentralised alternative to USDC/USDT. While still smaller and less liquid than incumbents, its integration with the largest lending platform in DeFi gives it strong growth potential. With V4 enhancements like sGHO and cross-chain minting, GHO could evolve from "the cheap borrow" to a go-to stablecoin for saving and spending across DeFi.

Ready to Explore GHO?

Discover current GHO yields and compare stablecoin opportunities across DeFi protocols. Find the best rates for your borrowing and lending strategies.

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