How It Works
Aave v3 users with sufficient collateral deposited can mint GHO at a governance-set borrow rate (currently around 6–8% APY). GHO is minted when users open a GHO borrow position and burned when they repay. The over-collateralization ratio is determined by Aave's existing risk parameters for each collateral asset. Facilitators — other protocols approved by Aave governance — can also mint GHO against different collateral types (e.g., FlashMinter for flash loan arbitrage). GHO holders can stake in the Aave Safety Module as stkGHO, which earns AAVE token rewards and is the primary liquidity backstop.
Backing Type: Crypto-Collateralized
Crypto-collateralized stablecoins are over-collateralized by on-chain assets such as ETH, WBTC, or other tokens. Users lock collateral in smart contracts to mint stablecoins, and automated liquidations maintain solvency if collateral values drop.