On July 2, 2024, Aave, the leading decentralized finance (DeFi) lending protocol, announced the deployment of its GHO stablecoin on Arbitrum, the prominent Layer 2 network. This strategic move allows users to natively mint and burn GHO through the Aave v3 deployment on Arbitrum, enhancing the stablecoin’s utility and accessibility.
Aave’s Strategic Integration
Aave founder and CEO, Stani Kulechov, emphasized the benefits of integrating GHO with multiple networks. “Integrating with other networks will lower fees, offer faster transactions, and enhance liquidity, making GHO more attractive to users and ushering in a variety of new use cases, including GHO digital payments,” Kulechov stated.
The Arbitrum DAO has allocated 750,000 ARB tokens (approximately $582,300) to incentivize the adoption of GHO on the network. This initiative aims to foster robust user engagement and liquidity for the newly deployed stablecoin.
Multichain Expansion Strategy
The deployment on Arbitrum marks the initial phase of GHO’s multichain expansion, following a community vote in May where Aave’s cross-chain launch strategy received unanimous support. Aave is leveraging Chainlink’s cross-chain interoperability protocol (CCIP) to facilitate this expansion, ensuring that each GHO deployment is backed by reserves held on Ethereum.
GHO is currently the 21st largest stablecoin with a market cap of $89.1 million, according to CoinGecko. The stablecoin’s expansion across different networks is expected to further boost its market presence and usability.
Future Deployments and Roadmap
Following the successful integration with Arbitrum, Aave plans to extend GHO’s reach to additional networks through community governance. In a recent vote, Aave holders selected Arbitrum as the first cross-chain rollout with an 87.5% approval, followed by Avalanche with 12.2%.
In addition to expanding GHO’s presence, Avara, the development company behind Aave, has outlined a three-year roadmap that includes launching a new v4 iteration, a bespoke Layer 2 network, and deploying Aave onto non-Ethereum Virtual Machine (EVM) networks.
Non-EVM Network Integration
Avara is also exploring the deployment of Aave on non-EVM networks. On July 1, the Aptos Foundation published a preliminary proposal advocating for Aave v3’s first non-EVM launch on the Aptos Layer 1 network, which supports the Move programming language rather than Solidity. The Aptos Foundation committed up to 2 million APT tokens ($13.76 million) to fund liquidity mining incentives for this deployment.
Chainlink’s CCIP facilitates cross-chain transfers across both EVM-compatible networks and non-EVM chains, suggesting that GHO could potentially expand to Aptos in the future using a burn-and-mint mechanism for cross-chain transfers.
Aave’s deployment of the GHO stablecoin on Arbitrum is a significant milestone in its cross-chain expansion strategy, aimed at enhancing the stablecoin’s utility and adoption. With plans for further integrations and a robust roadmap, Aave is positioned to strengthen its role as a leading player in the DeFi ecosystem.
