The Complete Guide to GHO Stablecoin
Everything you need to know about Aave's native decentralized stablecoin: how it works, how to mint it, yield opportunities, and how GHO compares to other stablecoins.
What is GHO?
GHO (pronounced "go") is a decentralized, over-collateralized stablecoin pegged to the US dollar. It was launched by the Aave Protocol, one of the largest decentralized lending platforms in DeFi, and went live on Ethereum mainnet in July 2023.
Unlike centralized stablecoins such as USDC or USDT, GHO is not backed by fiat reserves in a bank account. Instead, users mint GHO by depositing crypto collateral into Aave V3. This makes GHO a crypto-native stablecoin governed entirely by the Aave DAO, with no single entity controlling its issuance.
The meaning behind the name "GHO" is intentionally simple, designed to be memorable and easy to pronounce. It represents Aave's vision of a stablecoin that just works, letting users "go" anywhere in DeFi with a stable unit of account.
Over-Collateralized
Every GHO token is backed by more than $1 of crypto collateral deposited in Aave V3.
DAO Governed
Interest rates, facilitator caps, and all key parameters are controlled by AAVE token holders.
Multi-Collateral
Mint GHO using any collateral supported by Aave V3, including ETH, WBTC, LINK, and more.
How GHO Works
GHO uses a unique facilitator model to manage minting. Facilitators are protocols or entities approved by Aave governance to mint and burn GHO tokens, each with a set capacity (bucket) that limits how much GHO they can create.
Supply Collateral
Deposit supported crypto assets (ETH, WBTC, LINK, etc.) into Aave V3 on Ethereum. Your collateral earns supply interest while also backing your GHO position.
Mint GHO
Borrow GHO against your collateral at a rate set by Aave governance. Unlike other Aave borrows, the GHO interest rate is fixed and does not fluctuate with utilization.
Facilitator Control
Each facilitator has a bucket capacity that caps how much GHO it can mint. The Aave V3 Ethereum pool is the primary facilitator. FlashMinter is another, enabling flash loans of GHO for arbitrage and liquidations.
Interest & Revenue
All interest paid on GHO borrows flows directly to the Aave DAO treasury, unlike regular Aave borrows where interest goes to suppliers. This creates a direct revenue stream for the protocol.
Key Features of GHO
What makes GHO different from other stablecoins in the market.
Governance-Controlled Rate
The GHO borrow rate is set by Aave governance through on-chain votes, not by market utilization. This provides more predictable borrowing costs for users.
stkAAVE Discount
Users who stake AAVE in the safety module (stkAAVE) receive a discount on the GHO borrow rate. This incentivizes staking and strengthens Aave's security.
Multi-Collateral Backing
GHO can be minted against any asset supported by Aave V3 on Ethereum, providing diverse collateral backing and reducing dependency on a single asset.
Revenue to DAO
100% of GHO borrow interest flows to the Aave DAO treasury, making GHO a significant revenue source for the protocol.
Flash Minting
The FlashMinter facilitator enables uncollateralized GHO flash loans within a single transaction, supporting arbitrage and liquidation bots.
Cross-Chain Expansion
GHO is expanding beyond Ethereum to other networks via Chainlink CCIP, enabling native GHO usage on Arbitrum and other L2s.
GHO vs Other Stablecoins
See how GHO stacks up against the most popular stablecoins.
| Feature | GHO | USDC | USDT | DAI | FRAX |
|---|---|---|---|---|---|
| Issuer | Aave DAO | Circle | Tether | MakerDAO | Frax Finance |
| Type | Decentralized | Centralized | Centralized | Decentralized | Hybrid |
| Backing | Crypto (over-collat.) | USD reserves | USD reserves | Crypto + RWA | Crypto + AMO |
| Governance | AAVE holders | Circle (company) | Tether (company) | MKR holders | FXS holders |
| Interest Rate | Fixed (governance) | N/A | N/A | Variable (DSR) | Variable |
| Chains | Ethereum, Arbitrum | 20+ chains | 20+ chains | Ethereum + bridges | Multi-chain |
Where to Use GHO
GHO is integrated across the DeFi ecosystem with growing adoption.
Decentralized Exchanges
Trade GHO on DEXs like Balancer, Curve, and Maverick. GHO is paired with other stablecoins in deep liquidity pools, making it easy to swap.
Lending Protocols
Supply GHO on lending platforms like Morpho and Spark to earn interest. As GHO adoption grows, lending opportunities continue to expand.
Liquidity Provision
Provide liquidity in GHO pools on Balancer and Curve to earn trading fees and additional incentives from the Aave DAO.
Payments
Use GHO as a stable medium of exchange for peer-to-peer payments, invoicing, and everyday transactions within the crypto ecosystem.
Yield Aggregators
Deposit GHO into yield aggregators that automatically optimize returns across multiple protocols and strategies.
Cross-Chain DeFi
Bridge GHO to Arbitrum via Chainlink CCIP for lower gas fees and access to the growing L2 DeFi ecosystem.
How to Mint GHO
A step-by-step guide to minting GHO on Aave V3.
Connect Your Wallet
Go to app.aave.com and connect a Web3 wallet like MetaMask, Rabby, or Coinbase Wallet. Make sure you are on the Ethereum network.
Supply Collateral
Deposit supported assets (ETH, WBTC, LINK, etc.) into the Aave V3 Ethereum market. Your collateral must exceed the value of GHO you want to mint, based on the asset's loan-to-value ratio.
Borrow GHO
Navigate to the GHO borrow section and enter the amount you want to mint. Review the borrow rate (check if you qualify for the stkAAVE discount) and confirm the transaction.
Use Your GHO
GHO will appear in your wallet immediately. Use it in DeFi protocols, provide liquidity, earn yield, or simply hold it as a stable asset.
Repay & Reclaim Collateral
When ready, repay your GHO debt plus accrued interest on Aave. Once repaid, you can withdraw your collateral. The repaid GHO is burned, reducing the total supply.
GHO Yield Opportunities
Where to earn yield on your GHO stablecoins.
Balancer Liquidity Pools
Provide liquidity in GHO/USDC or GHO/USDT pools on Balancer. These pools often receive boosted AAVE incentives on top of trading fees.
Trading Fees + IncentivesCurve Finance
GHO stableswap pools on Curve offer low-slippage trading and yield from trading fees. CRV rewards may also be available depending on gauge allocations.
Stableswap YieldLending on Morpho
Supply GHO to Morpho vaults for optimized lending rates. Morpho matches lenders and borrowers peer-to-peer for better rates on both sides.
Lending InterestCoinstancy Savings
Earn yield on stablecoins with Coinstancy's managed savings products. Benefit from daily compounding, instant withdrawals, and full insurance coverage.
Managed YieldRisks and Considerations
Important risks to understand before using GHO.
Depegging Risk
GHO can trade below $1 if market demand weakens or confidence drops. While the over-collateralization provides a floor, temporary depegs have occurred in GHO's history and may happen again.
Smart Contract Risk
GHO relies on Aave V3 smart contracts. While Aave is one of the most audited protocols in DeFi, no code is immune to potential vulnerabilities or exploits.
Governance Risk
Since Aave DAO controls all GHO parameters, poor governance decisions (e.g., incorrect rate changes or risky facilitators) could negatively impact GHO stability.
Disclaimer: This guide is for educational purposes only and does not constitute financial advice. Stablecoins and DeFi protocols carry inherent risks. Always do your own research and only invest what you can afford to lose.
Frequently Asked Questions
What is GHO?
How do you mint GHO?
Do stkAAVE holders get a discount on GHO?
Is GHO safe to use?
Where can I earn yield on GHO?
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