AAVE's decentralized Stablecoin GHO launch test network: Here is a review of its latest progress

Title: AAVE's Decentralized Stablecoin GHO Rollout Test Network: A Review of its latest progress

原文作者：月之暗面， PANews

On February 9th, $GHO, a decentralized dollar stable coin issued by Aave, was officially tested online in Ethereum Goerli for developers and community users to access its interface to detect potential problems with its workflow. Currently the test network supports DAI, USDC, AAVE and LINK.

And the addition of a new Facilitator to support the FlashMinting model, which acts in the same way as flashloan and is intended to improve transaction efficiency.

This is the release of the fourth audit report issued by ABDK, combined with the previous reports of Open Zepplin and SigmaPrime, indicating that the final audit work of the mainnet online is nearly completed.

In addition, Aave also synchronously releases NFT for GHO testing, which can be obtained here.

Regarding GHO, PANews has previously published an interpretation. For details, please refer to the following two articles. This paper focuses on the interpretation of the updated content and phased progress.

《Aave 也要推稳定币了，读懂去中心化美元稳定币 GHO 提案 》

《稳定币 GHO 能否帮助 Aave 协议进一步发展并超越 MakerDAO 和 DAI？ 》

A step away: the test network function is complete

According to Aave's previous planning, GHO should have been launched in November last year or January this year, but finally, after Aave V3 was launched on the Ethereum mainnet on January 27 this year, GHO officially started the private beta on V3, in order to better cooperate with Aave.

GHO still needs excess collateralized assets to lend out GHO and maintain the anchoring of price and dollar through arbitrage mechanism. However, in terms of specific mechanism, there are the following innovations:

facilitator: Any agreement, entity or project can apply to be the facilitator. Facilitators can determine the way and strategy of destroying GHO by themselves. The first facilitator is Aave itself; "Bucket" : promoters will have regular limits on their GHO holdings to stabilize GHO prices and liquidity; "Discount mode"

(Discount) : The rate is calculated based on stkAAVE holdings. Only stkAAVE is eligible for GHO's loan discount.

In this update, the facilitator will make significant progress, and for the first time, will have a second facilitator after Aave to test the FlashMinting mode.

In the Aava V2 to V3 migration, a major issue was that the GHO could not be used in the flashloan model to ensure protocol security and avoid price breakouts due to reflexive issues. FlashMinting provides the same functionality as Flash lending, but instead of borrowing assets from a pool of funds, users can complete the entire process of Mint GHO and repaying assets in a single transaction.

Note, however, that the proposal to introduce this mode still requires a final vote by the DAO before it can take effect.

The establishment of Facilitator Framework is also discussed. According to the assumption of Aave, facilitator will be the main operator of Bucket. This time, more facilitators will be introduced gradually to gradually establish the exchange depth similar to Curve stablecoin pool. At the same time, the freedom of the promoters is guaranteed.

GHO's own Peg Stability modules (PSMs) "Peg stability module" is also being preresearched synchronically, and relevant functions will be tried in this test. Considering the supply of assets behind GHO, it should be a high probability event that it is limited to Aave protocol for the time being. Whether other agreed pools can be set up remains uncertain.

We can refer to the collapse of UST, the threshold at which liquidity was drained on Curve, and the huge capital attack of arbitrageurs, which eventually led to price unanchering.

The problem with adopting the PSM mechanism is that it will inhibit the expansion of the agreed revenue, but AaveDAO will be the sole recipient of the agreed revenue, so the smooth adoption of the model can be guaranteed. The key to promoting GHO's liquidity is to coordinate the initiative of stkAAVE and the promoters.

However, in the current test network, users can get DAI/USDC/AAVE/LINK four types of assets for testing to experience the process and feedback bugs for the team to make subsequent changes and improvements. It should be noted that due to the large number of participants in the test network, there may be failure to get test tokens, which requires multiple attempts.

In addition, it is worth mentioning the completeness of the audit, as GHO has undergone four full audits to ensure its security.

Taking the latest review of ABDK as an example, functional testing and security audit were conducted on all codes. In 85 categories, 6 modification suggestions were put forward. According to the progress of GHO, there will be another security audit before the official launch.

GHO update plan on mainnet rollout

Rework stkAAVE to adapt it to the discounted rate model to be implemented by GHO;

The Bucket capacity ceiling and borrowing rate framework have been preliminarily established. It should not only reflect the current market conditions, but also ensure GHO price stability as much as possible.

Aave will launch more AIPs (Aave upgrade Proposal) to ensure the subsequent improvement and promotion of GHO, such as whether to add more facilitators;

The Bug Bounty program, which will pay security bug bounties of up to 250,000 USDC to encourage white hats and users to report vulnerabilities;

The community will have full administrative authority, and Aave will be more involved as a builder to maintain maximum decentralization and censorship resistance.

conclusion

Aave will explore the DeFi narrative of lending + Stablecoin.

In 2022, following the UST collapse and the USDC's response to sanctions against Tornado Cash, a new round of decentralized stablecoin models began to take shape: Issued by the large DeFi protocol to ensure its decentralization and usage scenarios, while maintaining the on-chain asset-backed excess mortgage model to avoid the dangers of the extreme algorithmstablecoin model.

crvUSD and GHO are among the leaders. FRAX and DAI have come through the darkest hour with renewed vigor.

At present, LSD and Stablecoin have also become the new DeFi business breakout point, Stablecoin will become an important means for DeFi protocol to consolidate its moat.

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