The Complete Guide to GHO Stablecoin
Aave's native decentralized stablecoin explained: how it works, how to mint it, where to earn yield with it, and how GHO compares with other stablecoins.
What is GHO?
GHO is a decentralized, over-collateralized stablecoin pegged to the US dollar. It was created by the Aave Protocol, one of the largest lending protocols in DeFi by total value locked (TVL, tracked live on DefiLlama). According to the Aave governance forum, GHO 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. Users mint GHO by borrowing against crypto collateral deposited in Aave V3. The Aave DAO (decentralized autonomous organization) governs GHO, so no single company controls its issuance.
GHO is an ERC-20 token. Its supply grows when users mint it and shrinks when debt is repaid and the GHO is burned. Compare it with other dollar tokens in our stablecoin yield guide.
Over-Collateralized
Every GHO token is backed by more than $1 of crypto collateral deposited in Aave V3.
DAO Governed
The borrow rate, facilitator caps and other key parameters are decided by AAVE token holders through on-chain votes.
Multi-Collateral
Mint GHO against collateral accepted by Aave V3 on Ethereum, such as ETH, WBTC or LINK (see the Aave app for the current list).
How GHO Works
GHO uses a facilitator model to manage minting. Facilitators are protocols or entities approved by Aave governance to mint and burn GHO. Each one has a capacity, called a bucket, that caps how much GHO it can create.
Supply Collateral
Deposit supported crypto assets (ETH, WBTC, LINK and others) into Aave V3 on Ethereum. Your collateral earns supply interest while it backs your GHO position.
Mint GHO
Borrow GHO against your collateral at a rate set by Aave governance. Unlike other Aave assets, the GHO rate is not driven directly by pool utilization. Check the current rate on the Aave app before borrowing.
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: it enables flash loans of GHO for arbitrage and liquidations.
Interest & Revenue
Interest paid on GHO borrows goes to the Aave DAO treasury, according to the GHO documentation. For regular Aave borrows, interest goes to suppliers instead. GHO is therefore 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. Governance can still change it, so the rate is predictable between votes rather than fixed forever.
stkAAVE Discount
Users who stake AAVE in the Safety Module (stkAAVE) receive a discount on the GHO borrow rate for part of their debt. This rewards staking, which backs the protocol in case of a shortfall.
Multi-Collateral Backing
GHO can be minted against the assets accepted as collateral by Aave V3 on Ethereum. This diversifies the backing and reduces dependency on a single asset.
Revenue to DAO
GHO borrow interest goes to the Aave DAO treasury rather than to suppliers, which makes GHO a 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 available beyond Ethereum on selected layer 2 networks such as Arbitrum, moved through Chainlink CCIP. The GHO documentation lists the networks currently supported.
GHO vs Other Stablecoins
How GHO compares with the most widely used stablecoins.
| Feature | GHO | USDC | USDT | DAI | FRAX |
|---|---|---|---|---|---|
| Issuer | Aave DAO | Circle | Tether | MakerDAO (Sky) | 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 | Set by governance | N/A | N/A | Variable (DSR) | Variable |
| Chains | Ethereum + L2s via CCIP | Many chains | Many chains | Ethereum + bridges | Multi-chain |
Where to Use GHO
GHO is integrated across several parts of the DeFi ecosystem.
Decentralized Exchanges
Trade GHO on decentralized exchanges (DEXs) such as Balancer and Curve. GHO is paired with other stablecoins in liquidity pools; check pool depth before a large swap.
Lending Protocols
Supply GHO on lending platforms such as Morpho to earn interest from borrowers. Available markets and rates change over time, so check each protocol directly.
Liquidity Provision
Provide liquidity in GHO pools on Balancer and Curve to earn trading fees. Aave governance may vote extra incentives for some pools; these are temporary and change over time.
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
Move GHO to supported layer 2 networks such as Arbitrum through Chainlink CCIP for lower gas fees. See our guide on how to bridge crypto.
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 such as MetaMask, Rabby or Coinbase Wallet. Make sure you are on the Ethereum network.
Supply Collateral
Deposit supported assets (ETH, WBTC, LINK and others) 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 (LTV) ratio.
Borrow GHO
Open the GHO borrow section and enter the amount you want to mint. Review the current borrow rate (and whether you qualify for the stkAAVE discount), then confirm the transaction.
Use Your GHO
GHO appears in your wallet once the transaction is confirmed. Use it in DeFi protocols, provide liquidity, earn yield, or 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. Some pools receive incentives voted by Aave governance on top of trading fees; check the pool page for the current terms.
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 at the time.
Stableswap YieldLending on Morpho
Supply GHO to Morpho markets or vaults to earn lending interest. Rates depend on utilization and change continuously.
Lending InterestCoinstancy Savings
Earn 7.50% APY on USDC with Coinstancy Dollar Savings. Interest accrues every second and is automatically reinvested. There is no lock-up and you can request a withdrawal at any time. Coinstancy may arrange additional cover for selected protocol exposures through OpenCover; when active, it can help address eligible incidents within the policy's terms and limits.
Managed YieldRisks and Considerations
Important risks to understand before using GHO.
Depegging Risk
GHO can trade below $1 if demand weakens or confidence drops. Over-collateralization supports the value of the debt, but it does not force the market price to $1. GHO traded below its peg for several months after launch, as discussed on the Aave governance forum, and this can happen again.
Smart Contract Risk
GHO relies on Aave V3 smart contracts. Aave publishes its audit reports, but no code is immune to vulnerabilities or exploits.
Governance Risk
Aave DAO controls all GHO parameters. Poor governance decisions (for example a badly set rate or a risky facilitator) could weaken 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?
Sources and further reading
The figures and claims on this page rest on the documents below. Time-sensitive figures (rates, yields, fees, market data) move: check the live value at the source before acting on it.
- GHO documentationdocs.gho.xyz
How GHO is minted and burned, facilitators and bucket capacities, the governance-set borrow rate, the stkAAVE discount and the FlashMinter.
- Aave Protocol documentationdocs.aave.com
Aave V3 supply, borrow, loan-to-value and liquidation mechanics that GHO minting relies on.
- Aave governance forumgovernance.aave.com
GHO mainnet launch in July 2023, borrow rate decisions, facilitator approvals and the post-launch discussions on GHO trading below $1.
- Chainlink CCIP documentationdocs.chain.link
The cross-chain protocol used to move GHO between Ethereum and supported layer 2 networks.
- DefiLlamadefillama.com
Live aggregator for Aave total value locked (TVL) and GHO circulating supply; figures move daily.
Last reviewed: September 2026. External links open in a new tab; Coinstancy is not responsible for their content.
Earn Yield on Stablecoins with Coinstancy
Earn 7.50% APY on USDC with Coinstancy Dollar Savings. Interest accrues every second and is automatically reinvested. No lock-up, request a withdrawal at any time. Coinstancy may arrange additional cover for selected protocol exposures through OpenCover; when active, it can help address eligible incidents within the policy's terms and limits.