Aave approved the DAO stablecoin project and has received a huge response from the crypto community.
Aave DAO’s approval of the stablecoin project caused outrage in the crypto community. Many people think that this stablecoin may suffer the same fate as TerraUSD.
Aave DAO, the governing body behind the DeFi project, has unanimously approved the project to create an over-collateralized stablecoin.
This proposal by Aave Companies was voted on for three days and received a massive 99.9% support.
The GHO-named stablecoin will be an Ethereum-based over-collateralized stablecoin. The next part of the process will be the creation of GHO tokens via Aave Improvement Proposal (AIP). Users who want to generate GHO will be able to do so by depositing tokens accepted by Aave.
The Aave protocol hopes to leverage the GHO stablecoin to offer better liquidity and passive income.
In overcollateralized coins, users are required to deposit an amount greater than the stablecoin’s issuance value. This results in an over-collateralized loan on stablecoins.
TerraUSD Fear
This announcement of Aave made the Aave community nervous. Because a short time ago, UST suffered a major collapse.
There are also those who defend this move of Aave and argue that it is unreasonable to compare it with the UST. One user said on the subject:
“UST was unsecured and run by a crook. Aave is producing an over-collateralized stablecoin similar to DAI. Aave is the largest DeFi loan protocol in the world and is extremely transparent.”
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