Aave recently announced the launch of its decentralised stablecoin GHO, based on the Ethereum network (ERC20). All technical information about the project is publicly available on GitHub.
The initial deployment of GHO will take place within Goerli's test network, after which it will be introduced to the main Ethereum network. Three firms have completed reviews of the project - Open Zeppelin, SigmaPrime and ABDK, Aave claims.
This stablecoin will use resources from Aave's protocol reserves as collateral and its exchange rate will be pegged to the US dollar exchange rate. GHO issuance will require more assets allocated as collateral than those issued in the form of this stablecoin; this distinction is expected to maintain a decentralised price stability structure.
Currently, ETH can be provided as collateral for loans in the Aave protocol; however, there is no possibility to use USDT stablecoins for a similar purpose yet.
GHO Stablecoin will allow users to earn interest, but the amount of this interest will not be based on a demand-supply model.
Rather than being subject to market forces that dictate centralised stablecoins, the interest rate will be controlled by key individuals in Aave Governance. The developers also stated that it would be based on an already established structure.
While there is always the possibility of a decentralised stablecoin smart contract being hacked, Aave believes that their "conservative approach" to development will take care of any potential problems.