Aave DAO has officially launched the GHO stablecoin on the Arbitrum network, marking the first step in its cross-chain expansion strategy.
GHO, Aave Protocol's multi-collateralized stablecoin, now utilizes Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to facilitate this rollout. Starting with Arbitrum, GHO will progressively expand to other networks, aiming to increase accessibility, lower transaction costs, enhance user experience, and improve liquidity.
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Pioneering Cross-Chain Integration
Though issued on Ethereum mainnet, GHO’s cross-chain strategy, enabled by Chainlink CCIP, opens doors to integration opportunities and new use cases. With Arbitrum, the largest Layer 2 network boasting $17.7 billion in Total Value Locked (TVL), GHO becomes a borrowable asset within the Aave Arbitrum pool. This integration aims to make GHO more accessible and cost-effective, with additional use cases anticipated.
"Congratulations to the Aave community on achieving this milestone for GHO’s expansion beyond Ethereum mainnet to Arbitrum. The DAO’s approach to making GHO more accessible aligns with our commitment to stability and risk management, integrating with other networks to lower fees, offer faster transactions, and enhance liquidity."
Aave Labs Founder and CEO Stani Kulechov
Nina Rong, Head of Ecosystem Development at The Arbitrum Foundation, expressed excitement: “This integration is poised to revolutionize accessibility, lower transaction costs, and unlock unprecedented liquidity. As decentralized finance advances, we anticipate transformative new use cases across Arbitrum.”
Security and Efficiency with Chainlink CCIP
Chainlink’s CCIP was chosen for its compatibility with both EVM and non-EVM networks, enhancing risk mitigation, security, and user experience through advanced features like rate limits, flexible billing, Programmable Token Transfers, and a separate Risk Management Network. Sergey Nazarov, Co-Founder of Chainlink, highlighted, “Aave’s choice of Chainlink’s CCIP for cross-chain GHO transfers underscores their commitment to security and innovation.”
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GHO uses a lock-and-mint model for cross-chain transfers between Ethereum and non-Ethereum chains like Arbitrum, ensuring sufficient collateralization. As additional chains are supported, transfers will use a burn-and-mint model for maximum capital efficiency and fungibility, maintaining security and flexibility for GHO’s future expansion.
The Aave DAO opted for a phased rollout, starting with Arbitrum after thorough public discussion and evaluation. Integrating GHO into the Arbitrum Aave pool as a borrowable asset marks a significant step, allowing users to supply GHO for yield and offering a new stablecoin option for borrowing, diversifying risk, and fostering new product development.
Incentives for Growth
To facilitate the launch, the Arbitrum DAO has allocated 750,000 ARB through the Long-Term Incentives Pilot Program. Aave DAO service provider ACI has facilitated an incentive campaign from the Arbitrum ecosystem to foster growth, with the Aave Liquidity Committee enhancing liquidity through these incentives.
About Aave Protocol
Aave is a decentralized liquidity protocol that allows users to deposit and earn passive income or borrow digital assets without third-party intermediaries. Governed by the Aave DAO, the protocol includes features like supply and borrow caps and flash loans. Visit Aave Governance to learn more and participate.
About Chainlink
Chainlink is a decentralized computing platform providing real-world data, offchain computation, and secure cross-chain interoperability. It powers applications and markets across sectors like banking, DeFi, global trade, and gaming. Learn more at Chainlink or developer documentation.
About The Arbitrum Foundation
The Arbitrum Foundation supports the Arbitrum ecosystem, promoting innovation, technology development, and community education. Learn more at Arbitrum Foundation.
